Use the Following Information for Questions:
Melchor Inc -The Warranty Payable on the December 31, 2011 Balance Sheet

Multiple Choice

Use the following information for questions:
Melchor Inc.offers a two-year warranty against failure of its products.The estimated liability is 1.5% in the year of sale and 3% in the second year.Sales and actual warranty expense for 2010 and 2011 were: $$\begin{array} { c c c } & \text { Sales } & \text { Actual Warranty Costs Incurred During Year } \\2010 & \$ 3,500,000 & \$ 110,000 \\2011 & \$ 3,900,000 & \$ 195,000\end{array}$$
-The warranty payable on the December 31, 2011 balance sheet was:

A) $0
B) $28,000
C) $138,000
D) $175,500