In 2013, Golden Dynamics Corporation began selling a new line of products that carries 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 3%; second year of warranty 5%. Sales and actual warranty expenditures for 2013 and 2014 are presented below:

	2013	2014
Sales	$500,000	$600,000
Actual warranty expenditures	24,000	36,000

For year ended December 31, 2014, the amount of warranty expense reported in 2014 would be:

Answer

		$40,000
		$42,000
		$48,000
		$60,000