Which of the following is a contingency that should be accrued?

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Which of the following is a contingency that should be accrued?

A. The company is being sued and a loss is reasonably possible and reasonably estimable.
B. The company deducts life insurance premiums from employees’ paychecks.
C. The company offers a two-year warranty and the expenses can be reasonably estimated.
D. It is probable that the company will receive $100,000 in settlement of a lawsuit.

Answer: C

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