Excom manufactures high-end whole home electronic systems. The company provides a two-year warranty for all products sold. The company estimates that the warranty costs related to dollar sales are 2% for the first year of warranty and 5% for the second year of warranty. Sales and actual warranty expenditures for 2018 and 2019 are presented below:

20182019

Sales$600,000$800,000

Actual Warranty Exp30,00040,000

What is the estimated warranty liability at the end of 2019?

$16,000

$28,000

$38,000

$58,000