A Company Offers a Cash Rebate of $1 on Each

A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2008. Historically, 10% of customers mail in the rebate form. During 2008, 4,000,000 packages of light bulbs are sold, and 140,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2008 financial statements dated December 31?

A) $400,000; $400,000
B) $400,000; $260,000
C) $260,000; $260,000
D) $140,000; $260,000