Radio Hut Inc. offers a two-year assurance warranty against failure of its products. The estimated liability is 1.5% in the year of sale and 3% in the second year. Sales and actual warranty expense for 2020 and 2021 were:

Sales Actual Warranty Costs Incurred During Year

2020 $3,500,000 $110,000

2021 $3,900,000 $195,000

The warranty provision on the December 31, 2020 statement of financial position sheet was

A) $47,500

B) $105,000

C) $110,000

D) $157,500