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McKay Company sells merchandise with a 1-year warranty. In Year 1, sales consisted of 1,200 units. It is estimated that warranty repairs will average $10

McKay Company sells merchandise with a 1-year warranty. In Year 1, sales consisted of 1,200 units. It is estimated that warranty repairs will average $10 per unit sold, and 30% of the repairs will be made in Year 1 and 70% in Year 2. On the Year 1 income statement, McKay should show warranty expense of

a. $8,400

b. $3,600

c. $0

d. $12,000

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