During June,Vixen Company Sells $850,000 in Merchandise That Has a One

During June,Vixen Company sells $850,000 in merchandise that has a one year warranty.Experience shows that warranty expenses average about 3% of the selling price.Customers returned $14,000 of merchandise for warranty replacement during the month.The entry to settle the customer warranties is:

A) Debit Warranty Expense $11,500; credit Estimated Warranty Liability $11,500.
B) Debit Estimated Warranty Liability $25,500; credit Warranty Expense $25,500.
C) Debit Warranty Expense $14,000; credit Estimated Warranty Liability $14,000.
D) Debit Estimated Warranty Liability $11,500; credit Merchandise Inventory $11,500.
E) Debit Estimated Warranty Liability $14,000; credit Merchandise Inventory $14,000.

Correct Answer:

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