Fax Co. incorporated in 2020 and sold anew product with a 3 year warranty against defects Warranty costs are estimated at 4% of sales in the year of sale, 2% in the year after sale, and 5% in the second year after sale. Sales and actual warranty costs paid for 2020 are as follows: Sales Actual Warranty Costs Paid $3,500,000 $120,000 What is Fox's total warranty liability at December 31, 2020? $385,000 O $265,000 $20,000 0 $90,000