In 2006, Slimon Corporation Began Selling a New Line of Products

Multiple Choice

In 2006, Slimon Corporation began selling a new line of products that carry a two-year warranty against defects.Based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows: First year of warranty $\quad 2 \%$
Second year of warranty $\quad 5 \%$ Sales and actual warranty expenditures for 2006 and 2007 are presented below: $$\begin{array} { l r r } & { 2006 } &{ 2007 } \\\text { Sales } & \$ 300,000 & \$ 400,000 \\\text { Actual warranty expenditures }&10,000 & 20,000\end{array}$$ What is the estimated warranty liability at the end of 2007?

A) $19,000.
B) $29,000.
C) $49,000.
D) $8,000.