In 2015, Baloga Heating Company Sold 400 Water Heaters for $350

In 2015, Baloga Heating Company sold 400 water heaters for $350 each. The water heaters carry a 2-year warranty for repairs. Baloga estimates that repair costs will average 2% of the total selling price. How much is recorded in the warranty liability account as a result of selling the water heaters during 2015?

A) $4,200
B) $1,400
C) $2,800
D) no liability should be recorded until the water heaters are brought back for repairs.