At the beginning of 2021, XYZ Company began offering a two-year warranty on its products. The warranty program was expected to cost XYZ Company 7% of net sales. Net sales made under warranty in 2021 were $198 million. Fifteen percent of the units sold were returned in 2021 and repaired or replaced at a cost of $4.40 million. The amount of warranty expense that XYZ Company would adjust on December 31, 2021 is:

Multiple Choice

• $9.46 million.

• $29.70 million.

• $13.86 million.

• $4.40 million.