ABC's products carry a two-year warranty. The company estimates that the warranty costs as a percent of sales are 1% in the first year after the sale and 2% in the second year. Sales and actual warranty claims for 2010-2012 were as follows:

sales . claim in 2010 claim in 2011 claim in 2012

2010 $100,000 . $500 $1,000 $300

2011 $200,000 $3,000 $4,000

2012 . $300,000 $1,500

a) What was the warranty expense that ABC recognized in 2010, 2011,and 2012?

b) What was the warranty reserve liability that ABC reported on its 12/31/2012