In 2019, Waldo Balloons sold 50 hot air balloons at $25,000 each. The balloons carry a 5-year warranty for defects. Waldo estimates that repair costs will average 3% of the total selling price. The estimated warranty liability at the beginning of the year was $40,000. Claims of $15,000 were actually incurred during the year to honor their warranties.
Required:
What was the balance in the warranty liability at the end of the year?