During 2008, Gum Co. introduced a new product carrying a two-year warranty against defects. The estimated warranty costs related to dollar sales are 2 percent within twelve months following the sale and 4 percent in the second twelve months following the sale. Sales and actual warranty expenditures for the years ended December 31, 2008 and 2009, are as follows:

	Sales		Actual Warranty Expenditures
2008	$250,000		$2,250
2009	250,000		7,500
	$500,000		$9,750

What amount should Gum report as estimated warranty liability on its December 31, 2009 balance sheet?