Use the Following Information for Questions 40-42

Multiple Choice

Use the following information for questions 40-42.
Melman Microscopes 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 2016 and 2017 were:
-The warranty liability on the December 31, 2017 balance sheet was

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