Cycle Haven,Inc

Multiple Choice

Cycle Haven,Inc.offers warranties on all their bikes.They estimate warranty expense at 4.5% of sales.At the beginning of 2017,the Estimated Warranty Payable account had a credit balance of $2,200.During the year,Cycle Haven had $305,000 in sales and had to pay out $6,000 in warranty payments.How much Warranty Expense will be reported on the 2017 income statement?

A) $9,925
B) $8,200
C) $11,525
D) $13,725