Eckstein Company Sells Television Sets with a Two Year Service $\quad \$ 2,000$

Eckstein Company sells television sets with a two year service warranty. Each television sells for $400. In September, Eckstein sold 50 television sets and estimates that during the warranty period Eckstein will provide an average of $40 of service costs per television set. The journal entry that Eckstein Company should record to recognize the estimated service warranty expense for September is

A)
Estimated liability for service $\quad \$ 2,000$
Wages payable $\$ 2,000$
B)
$\begin{array}{lr}\text { Service warranty expense } & \$ 2,000 \\\text { Wages payable } & \$ 2,000\end{array}$
C)
$\begin{array}{ccc}\text { Estimated liability for }\\\text { warranty service } & \$ 2,000 & \\\text { Service warranty expense } & & \$ 2,000\end{array}$
D)
$\begin{array}{lr}\text { Service warranty expense } & \$ 2,000 \\\text { Estimated liability for } \\\text { warranty service }& \$ 2,000 \\\end{array}$

Correct Answer:

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