Swifty, Inc. sells 1110 units of a product that has a one-year warranty on parts. The average cost of honoring one warranty contract is $70. During the year 60 contracts are honored at a total cost of $4200. It is estimated that 120 contracts will be honored in the following year. The adjusting entry at the end of the current year will include a

credit of Warranty Liability $8400.

credit of Warranty Liability $12600.

debit of Warranty Expense $4200.

debit of Warranty Expense $12600.