In 2017, Baloga Heating Company sold 400 water heaters for $350 each. The water heaters carry a two-year warranty for repairs. Baloga estimates that repair costs will average 2% of the total selling price. How much is recorded in the warranty liability account as a result of selling the water heaters during 2017?

a.$1,400

b.$4,200

c.$2,800

d.No liability should be recorded until the water heaters are brought back for repairs.