The Rambo Corporation sells cars. Each car comes with a warranty that guarantees certain parts for four years. Over the years, the company has learned that 10% of cars eventually break during the warranty and cost $120 to fix. In addition, they tend to break evenly over the years. In the current year the company sold $9,000 cars and spent $25,000 for this years repairs. In computing its taxable income for the year, what amount of expense can be deducted by Rambo in connection with the warranty?

$52,000

$27,000

$25,000$108,000