Exhibit 13-5 Tractor Company Estimates Its Annual Warranty Expense at 4

Exhibit 13-5 Tractor Company estimates its annual warranty expense at 4% of annual net sales.The following information relates to the calendar year 2010:
$\begin{array}{l}\text { Net sales } &\$ 3,000,000 \\\text { Estimated liability under } \\\text { warranties: }\end{array}$


$\begin{array}{ll}\text { January } 1,2010 & 100,000 \\\text { December } 31,2010 \text {, after year-end adjustment } & 80,000\end{array}$

- Refer to Exhibit 13-5.The amount of warranty expense for 2010 is

A) $ 80, 000
B) $120, 000
C) $140, 000
D) $240, 000