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Fox Co. sold 1,200,000 lighters in 20x9, and estimates that 18,000 of them will be defective, but only 75% will be returned. During 20x9, 12,000

Fox Co. sold 1,200,000 lighters in 20x9, and estimates that 18,000 of them will be defective, but only 75% will be returned. During 20x9, 12,000 lighters were replaced under the warranty, and Foxs cost to replace a returned lighter is $4.50. The balance in Foxs warranty liability at December 31, 20x8 was $5,500. What is the warranty liability on Foxs on December 31, Year 20x9 balance sheet?

a.

$66,250

b.

$12,250

c.

$60,750

d.

$6,750

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