In 2012,Accu Heating Company Sold 400 Water Heaters for $350

Multiple Choice

In 2012,Accu Heating Company sold 400 water heaters for $350 each.The water heaters carry a 2-year warranty for repairs.Accu estimates that repair costs will average 2% of the total selling price.How much is recorded in the warranty liability account as a result of selling the water heaters during 2012?

A) $4,200
B) $2,800
C) $1,400
D) no liability should be recorded until the water heaters are brought back for repairs.