Wells Electric (WE) owed Estimated Warranty Payable of $1,200 at the end of 2015. During 2016, WE

Question:

Wells Electric (WE) owed Estimated Warranty Payable of $1,200 at the end of 2015. During 2016, WE made sales of $120,000 and expects product warranties to cost the company 3% of the sales. During 2016, WE paid $2,300 for warranties. What is WE's Estimated Warranty Payable at the end of 2016?
a. $2,300
b. $2,500
c. $3,600
d. $4,800