During August, Arena Company sells $365,000 in product that has a one year warranty. Experience shows that warranty expenses average about 5% of the selling price. The warranty liability account has a balance of $13,700 before adjustment. Customers returned product for warranty repairs during the month that used $10,300 in parts for repairs. The entry to record the customer warranty repairs is:

	Debit Warranty Expense $14,850; credit Estimated Warranty Liability $14,850.
	Debit Estimated Warranty Liability $18,250; credit Parts Inventory $18,250.
	Debit Warranty Expense $18,250; credit Estimated Warranty Liability $18,250.
	Debit Warranty Expense $10,300; credit Estimated Warranty Liability $10,300.
	Debit Estimated Warranty Liability $10,300; credit Parts Inventory $10,300.