During 2006, Blass Co $\text { At December } 31,2007 \text {, Blass should report an estimated warranty liability of }$

Multiple Choice

During 2006, Blass Co.introduced a new product carrying a two-year warranty against defects.The estimated warranty costs related to dollar sales are 2% within 12 months following sale and 4% in the second 12 months following sale.Sales and actual warranty expenditures for the years ended December 31, 2006 and 2007 are as follows: $\begin{array}{rrr}&&\text {Actual Warranty }\\&\text { Sales}&\text {Expenditures }\\2006 & \$ 800,000 & \$ 12,000 \\2007 & 1,000,000 & 30,000\\&\$1,800,000&\$42,000\\\end{array}$
$\text { At December } 31,2007 \text {, Blass should report an estimated warranty liability of }$

A) $0.
B) $10,000.
C) $30,000.
D) $66,000.