Carpenter Inc

Multiple Choice

Carpenter Inc. had a balance of $80,000 in its warranty liability account as of December 31, 2012. In 2013, Carpenter's warranty expenditures were $445,000. Its warranty expense is calculated as 1% of sales. Sales in 2013 were $40 million. What was the balance in the warranty liability account as of December 31, 2013?

A) $35,000.
B) $425,000.
C) $125,000.
D) $480,000.