During 2014, Gadget Co. introduced a new product carrying a 3 year warranty against defects. The estimated warranty costs related to the dollar sales are 1% within 12 months following the sale, 2% in the second 12 months following the sale and 3% in the following 12 months, until the end of the warranty period. Sales and actual warranty expenses were as follows:

Sales Actual warranty expenses

2014 $80,000 $1,000

2015 95,000 3,100

2016 102,000 6,150

What amount should Gadget report as estimated warranty liability at December 31, 2015?

	A.	$4,800
	B.	$6,370
	C.	$6,400
	D.	$16,620