Walter Corp If the Expense Warranty Accrual Method Is Used, What Amount

Multiple Choice

Walter Corp.introduced a new machine on January 1, 2010.The machine carried a two-year warranty against defects.The estimated warranty costs related to dollar sales were 3% in the year of sale and 5% in the year after sale.Additional information follows: $\begin{array}{lrr}&&\text { Actual Waranty }\\\text { Year } & \text { Sales } & \text { Expenditures }\\ 2010 & \$ 40,000 & \$ 600 \\2011 & 60.000 & 2,200\end{array}$
If the expense warranty accrual method is used, what amount relating to warranty expense should be reflected on the December 31, 2011 income statement?

A) $2, 200
B) $4, 800
C) $5, 200
D) $7, 400