At the beginning of the year, the Company had a warranty liability for potential defective monitors of $1,200,000. The Company warrants its product for 3-years and estimates warrant claims at the rate of 3% defects in the first year after sale, 2% in the second year after sale and % in the third year after sale. Sales of the monitors totaled $40,000,000 in 2018 and claims paid under warranty for 2018 were $2,600,000.

A. What was warranty expense for 2018?

B. What was the December 31, 2018 warranty liability?

C. Assume that in early 2019, management of the Company determined that Skip a Beat had better than expected claims experience and reduced its estimate for estimated warranty claims to 4% of sales across all three years of the warranty period. Further assume that sales for 2019 were $50,000,000. What was warranty expense for 2019?