Clark Corp began operations on 1/01/14 and has a fiscal year end of 12/31. Clark rebuilds transmissions and provides a 12 month warranty on all its work. Clark estimates that warranty performance cost will be approximately 2% of revenue. During 2014, Clark rebuilds transmissions and charges customers a total of $600,000. Also during 2014, Clark performs warranty work and in doing so incurs costs totaling $5,600.

Required: Determine the amount of warranty expense to appear in the year-end 12/31/14 income statement, and Determine the amount of estimated warranty liability to appear in the 12/31/14 balance sheet.