Mariano Corporation sells 10,000 units of inventory during the first year of operations for $500 each. Mariano provides a one - year warranty on parts. It is estimated that 5% of the units will be defective and that repair costs are estimated to be $50 per unit. In the year of sale, warranty contracts are honored on 60 units for a total cost of $3,000.

What amount will be reported as Estimated Warranty Liability at the end of the year?

A. 7,500

B. 3,000

C. 22,000

D. 25,000