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The Auditor for Universal Tools,Inc

Question 282

Multiple Choice

The auditor for Universal Tools,Inc.discovered in 2017 that the warranty liability account showed a $25,000 debit balance.She investigated and discovered that the 2% estimate for warranty expense was recorded and understated,and it was more likely 3.5%.Sales for 2017 were $5,500,000.She should make which one of the following entries?


A) The auditor for Universal Tools,Inc.discovered in 2017 that the warranty liability account showed a $25,000 debit balance.She investigated and discovered that the 2% estimate for warranty expense was recorded and understated,and it was more likely 3.5%.Sales for 2017 were $5,500,000.She should make which one of the following entries? A) Warranty Expense 25,000 B) Warranty Liability 82,500 C) Warranty Expense 82,500 D) Warranty Liability 192,500 Warranty Expense 25,000
B) The auditor for Universal Tools,Inc.discovered in 2017 that the warranty liability account showed a $25,000 debit balance.She investigated and discovered that the 2% estimate for warranty expense was recorded and understated,and it was more likely 3.5%.Sales for 2017 were $5,500,000.She should make which one of the following entries? A) Warranty Expense 25,000 B) Warranty Liability 82,500 C) Warranty Expense 82,500 D) Warranty Liability 192,500 Warranty Liability 82,500
C) The auditor for Universal Tools,Inc.discovered in 2017 that the warranty liability account showed a $25,000 debit balance.She investigated and discovered that the 2% estimate for warranty expense was recorded and understated,and it was more likely 3.5%.Sales for 2017 were $5,500,000.She should make which one of the following entries? A) Warranty Expense 25,000 B) Warranty Liability 82,500 C) Warranty Expense 82,500 D) Warranty Liability 192,500 Warranty Expense 82,500
D) The auditor for Universal Tools,Inc.discovered in 2017 that the warranty liability account showed a $25,000 debit balance.She investigated and discovered that the 2% estimate for warranty expense was recorded and understated,and it was more likely 3.5%.Sales for 2017 were $5,500,000.She should make which one of the following entries? A) Warranty Expense 25,000 B) Warranty Liability 82,500 C) Warranty Expense 82,500 D) Warranty Liability 192,500 Warranty Liability 192,500

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