Exhibit 9-4 During 2014, the Thomas Company Began Selling a New

Multiple Choice

Exhibit 9-4 During 2014, the Thomas Company began selling a new type of machine that carries a two-year warranty against all defects. Based on past industry and company experience, estimated warranty costs should total $2,000 per machine sold. During 2014, sales and actual warranty expenditures were $4,000,000 (80 machines) and $44,000, respectively.

-Refer to Exhibit 9-4. What amount should Thomas report as its estimated warranty liability at December 31, 2014?

A) $ 0
B) $ 44,000
C) $120,000
D) $116,000