Use the Following Information to Answer Questions

Multiple Choice

Use the following information to answer questions
Royal Cookware offers its customers a lifetime guarantee that its cookware will not break. The company estimates that 3% of the sets sold will become defective. In 2009, Royal sold 1,000,000 sets of cookware. Royal did not have any cookware returned for defects in that year. However, in 2010, 2,800 sets were returned to Royal for defects. Royal's average estimated cost to repair a set of cookware is $40.
-How much, if any, warranty expense should Royal recognize in 2009?

A) $ 0
B) $ 112,000
C) $ 120,000
D) $1,200,000
E) No answer can be computed without information on actual repair cost.