Oak Park Appliances, Inc. sells food processors for $300 with a 120-day warranty against defects. Past experience indicates that 5% of the processors will have some defect during the warranty period and that the necessary repairs and adjustments will cost $50 per defective unit. Sales for August were $438,000. Thirty of the units sold in August were reported defective and repaired in August. What is the August 31 journal entry for the estimated liability for product warranties for units sold in August?

Select one:

A.

Estimated Liability for Product Warranty

3,650

Product Warranty Expense

3,650

B.

Product Warranty Expense

21,900

Estimated Liability for Product Warranty

21,900

C.

Product Warranty Expense

2,150

Estimated Liability for Product Warranty

2,150

D.

Product Warranty Expense

3,650

Estimated Liability for Product Warranty

3,650