A company sold $$12,000$ worth of bicycles with an extended warranty. The company's experience is that warranty expense averages $2\%$ of sales. The current period's entry to record the warranty expense is:

Multiple Choice

Debit Warranty Expense $$240$; credit Cash $$240.$

Debit Prepaid Warranties $$240$; credit Warranty Expense $$240.$

Debit Estimated Warranty Liability $$240$; credit Cash $$240.$

Debit Sales Allowances $$240$; credit Estimated Warranty Liability $$240.$

Debit Warranty Expense $$240$; credit Estimated Warranty Liability $$240.$