Assume that in $2020$ ABC Company sells $1000$ units at an average price of $$200$ each. The selling price includes a one$-$year warranty on parts. ABC expects that $400$ units will be defective and that warranty repair costs will average $$40$ per unit. In $5-5-2021$ ABC honors warranty contracts on $50$ units, what is the adjusting entry on $31-12-2020?$

Select one:

a$.$ All answers are false

b$.$

Warranty Expense $200000$

Warranty Liability $200000$

c$.$

Warranty Liability $2000$

Repair Parts $2000$

d$.$

Warranty Expense $16000$

Warranty Liability $16000$

e$.$

Cash $1000$

Sales Revenue $1000$