Moore Company Estimates Its Annual Warranty Expense as 4% of Annual

Moore Company estimates its annual warranty expense as 4% of annual net sales.The following data relate to the calendar year 2007: $\begin{array}{lr}\text { Net sales } & \$ 1,500,000 \\\text { Warranty liability account } & \\\text { Balance, Dec. 31,2007 } & \$ 10,000&\text { debit before adjustment } \\\text { Balance, Dec. 31,2007 } & 50,000&\text { credit after adjustment }\\\end{array}$ Which one of the following entries was made to record the 2007 estimated warranty expense?

A) $\begin{array} { l } \text { Warranty Expense }&60,000\\ \text {Retained Earnings (prior-period adjustment) }&&10,000\\ \text { Warranty Liability}&&50,000\\ \end{array}$

B) $\begin{array} { l } \text { Varranty Expense }&50,000\\ \text { Retained Earnings (prior-period adjustment) }&10,000\\ \text { Warranty Liability}&&60,000\\ \end{array}$

C) $\begin{array} { l } \text { Warranty Expense}&40,000\\ \text { Varranty Liability}&&40,000\\ \end{array}$

D) $\begin{array} { l } \text { Varranty Expense}&60,000\\ \text { Varranty Liability}&&60,000\\ \end{array}$