Glen Arbor Corporation sells DVD players. The corporation also offers its customers a 4-year service-type warranty contract. Glen Arbor sold 20,000 warranty contracts at $99 each and spent $180,000 servicing warranties during 2023 and $200,000 servicing warranties in 2024. Estimated warranty expense for the four year period is $800,000. The Sales Warranty (Deferred Revenue) approach is applicable. Assume straight-line amortization. What is the net effect on 2024 Net Income?

Select one:

a.

$315,000

b.

$990,000

c.

$200,000

d.

$295,000

e.

$1,780,000