At the Beginning of Year 1, McKee, Incorporated Had a Balance

Short Answer

At the beginning of Year 1, McKee, Incorporated had a balance in the Warranty Payable account of $15,600. During the year McKee sold for $650,000 several products that carried a two-year warranty. McKee estimated that warranty expense would be 3% of sales for the year.
Required:
If McKee's paid warranty claims in the amount of $12,500 during Year 1, what is the balance in the Warranties Payable account after the warranty obligation is recognized?