Pedal Power Products Company Sells Bicycles for $240, with a 30-Day

Pedal Power Products Company sells bicycles for $240, with a 30-day warranty against defects. Past experience indicates that 6% of the bicycles will have a defect and that the necessary repairs will cost $32 per bicycle. Sales for May were $216,000; 20 units sold in May were found defective and repaired that month.
What is the May 31 journal entry for the estimated liability for product warranties?

A) Product Warranty Expense $\quad$ 1,088
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Estimated Liability for Product Warranty $\quad$ 1,088
B) Product Warranty Expense $\quad$ 640
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Estimated Liability for Product Warranty $\quad$ 640
C) Estimated Liability for Product Warranty $\quad$ 1,728
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Product Warranty Expense $\quad$ 1,728
D) Estimated Liability for Product Warranty $\quad$ 1,088
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Product Warranty Expense $\quad$ 1,088