Sunny introduces a new compact music player to compete with Apple's iPod that carries a two-year warranty against manufacturer's defects. Based on industry experience with similar product introductions, warranty costs are expected to be approximately 3% of sales. By the end of the first year of selling the product, total sales are $29.4 million, and actual warranty expenditures are $140,000. What amount (if any) should Sunny report as a liability at the end of the year? Note: Enter your answers in dollars, not in millions (i.e. $5.5 million should be entered as $5,500,000). Warranty Liability