Cycle Haven,Inc

Multiple Choice

Cycle Haven,Inc.offers warranties on all their bikes.They estimate warranty expense at 3.5% of sales.At the beginning of 2017,the Estimated Warranty Payable account had a credit balance of $1,400.During the year,Cycle Haven had $299,000 in sales and had to pay out $5,900 in warranty payments.How much Warranty Expense will be reported on the 2017 income statement?

A) $5,965
B) $7,300
C) $9,065
D) $10,465