121.Zennia Company provides its employees with varying amounts of vacation per year, depending on the length ofemployment. The estimated amount of the current year’s vacation cost is $135,000. The journal entry to recordthe adjusting entry required on December 31, the end of the current year, to record the current month’s accruedvacation pay is
a. $135,000
b. $67,500
c.$0
d. $11,250
122.Hall Company sells merchandise with a one-year warranty. In the current year, sales consisted of 4,500 units. Itis estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in the currentyear and 70% in the next year. In the current year's income statement, Hall should show warranty expense of
a. $45,000
b. $13,500
c. $31,500
d.$0
123.During September, Excom sold 100 radios for $50 each and provided a two-year warranty with each unit. Eachradio cost Excom $30 to produce. If 5% of the goods sold typically need to be replaced over the warranty periodand one is actually replaced during September, for what amount in September would Excom debit ProductWarranty Expense?
a. $50
b. $150
c. $30
d. $120
124.Wright Company sells merchandise with a one-year warranty. This year, sales consisted of 2,000 units. It isestimated that warranty repairs will average $15 per unit sold, and 30% of the repairs will be made this year and70% next year. In this year's income statement, Wright should show warranty expense of
a. $9,000.
b. $21,000.
c. $30,000.
d. $0.
125.Scott Company sells merchandise with a one-year warranty. Sales consisted of 2,500 units in Year 1 and 2,000units in Year 2. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will bemade in Year 1 and 70% in Year 2 for the Year 1 sales. Similarly, 30% of repairs will be made in Year 2 and 70%in Year 3 for the Year 2 sales. In the Year 3 income statement, how much of the warranty expense shown will bedue to Year 1 sales?
a. $6,000.
b. $14,000.
c. $20,000.
d. $0.
126.The cost of a product warranty should be included as an expense in the
a.period the cash is collected for a product sold on account
b.future period when the cost of repairing the product is paid
c.period of the sale of the product
d.future period when the product is repaired or replaced
127.McKay Company sells merchandise with a one-year warranty. In Year 1, sales consisted of 1,200 units. It isestimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in Year 1 and70% in Year 2. In the Year 1 income statement, McKay should show warranty expense of
a. $3,600
b. $8,400
c. $12,000
d. $0
128.During May, Blast sold 650 portable CD players for $50 each and provided a one-year warranty with eachunit. Each CD player cost Blast $25 to produce. If 10% of the goods sold typically need to be replaced over thewarranty period, for what amount should Blast debit Product Warranty Expense in May?
a. $3,250
b. $1,625
c. $650
d. $1,300
129.Estimating and recording product warranty expense in the period of the sale best follows the
a.cost concept
b.business entity concept
c.matching concept
d.materiality concept
130.The journal entry a company uses to record the estimated product warranty liability expense is
a.debit Product Warranty Expense; credit Product Warranty Payable
b.debit Product Warranty Payable; credit Cash
c.debit Product Warranty Expense; credit Cash
d.debit Product Warranty Payable; credit Product Warranty Expense