On 4/1/Y9, Gary began offering a new product for sale under a 1-year warranty. Gary had 5,000 units in inventory on 4/1/Y9. By 6/30/Y9, 3,000 of these units had been sold. Based on its experience with similar products, Gary estimated that the average warranty cost per unit sold would be $8. Actual warranty costs incurred from April 1 through June 30, Year 9, were $7,000.

What amount should Gary report as estimated warranty liability at June 30, Year 9?

• A.

  $33,000

• B.

  $17,000

• C.

  $9,000

• D.

  $16,000