During December, Vixen Company sells $864,000 in merchandise that has a one-year warranty. Warranty expense is estimated at 4% of sales. On January 5 of the following year, the merchandise requires repairs that are completed the same day. The repairs cost $15,400 for materials taken from parts inventory. The entry to record the estimated warranty liability at the end of December is:

Multiple Choice

• Debit Warranty Expense $19,160; credit Estimated Warranty Liability $19,160.

• Debit Warranty Expense $34,560; credit Estimated Warranty Liability $34,560.

• Debit Estimated Warranty Liability $19,160; credit Warranty Expense $19,160.

• Debit Estimated Warranty Liability $15,400; credit Warranty Expense $15,400.