p3. Reliance Company manufactures and sells wireless video cell phones, which it guarantees for five years. If a cell phone fails, it is replaced free, but the customer is chargeda service fee for handling. In the past, management has found that only 3 percent of thecell phones sold required replacement under the warranty. The average cell phone coststhe company $240. At the beginning of September, the account for estimated liabilityfor product warranties had a credit balance of $208,000. During September, 250 cellphones were returned under the warranty. The company collected $9,860 of service feesfor handling. During the month, the company sold 2,800 cell phones.