A Company Estimates That Warranty Expense Will Be 4% of Sales

A company estimates that warranty expense will be 4% of sales. The company's sales for the current period are $185,000. The current period's entry to record the warranty expense is:

A) $\begin{array}{|c|c|c|}\hline \text { Warranty Expense } & 7,400 & \\\hline \text { Sales } & & 7,400 \\\hline\end{array}$
B) $\begin{array}{|c|c|c|}\hline \text { Warranty Expense } & 7,400 & \\\hline \text { Estimated Warranty Liability } & & 7,400 \\\hline\end{array}$
C) $\begin{array}{|c|c|c|}\hline \text { Estimated Warranty Liability } & 7,400 & \\\hline \text { Estimated Warranty Expense } & & 7,400 \\\hline\end{array}$
D) $\begin{array}{|c|c|c|}\hline \text { Warranty Liability } & 7,400 & \\\hline \text { Cash } & & 7,400 \\\hline\end{array}$
E) No entry is recorded until the items are returned for warranty repairs.