In 2016, Scranton, Inc

Multiple Choice

In 2016, Scranton, Inc.sold 2,000 carpets for $50 each.The carpets carry a 2-year warranty for repairs.Scranton estimates that repair costs will average 3% of the total selling price.What is the amount that would be recorded in the warranty liability account as a result of selling the carpets during 2016?

A) $1,500
B) $3,000
C) $50
D) No liability should be recorded until the carpets are returned for repairs.