In 2012, Payton Corporation began selling a new line of products that carry a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows:

First year of warranty 2%

Second year of warranty 5%

2012 2013

Sales $600,000 $800,000

Actual warranty expenditures 20,000 40,000

What is the estimated warranty liability at the end of 2013?