Chapter 8: Horizon sells new cell phones that they warranty against defects for one year. Horizon
estimates 3% of Sales will be the cost of making good on the warranty. Horizon sales
for the year is estimated to be $500,000. During the year, Horizon paid $5,000 to fix
the bad cell phones under the warranty agreement.
Prepare the entry to record the estimated expense of the warranty.
Check: Warranty expense will be $15,000