Burnham Electric (BE) owed Estimated warranty payable of ($1,500) at the end of 2011. During 2012, BE

Question:

Burnham Electric (BE) owed Estimated warranty payable of $$1,500$ at the end of 2011. During 2012, BE made sales of $$100,000$ and expects product warranties to cost the company 6% of the sales. During 2012, BE paid $$2,700$ for warranties. What is BE’s Estimated warranty payable at the end of 2012?

a. $2,700

b. $4,800

c. $4,200

d. $4,500

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