Victory Auto Sales, a Used Car Dealership, Offers a One-Year

Victory Auto Sales, a used car dealership, offers a one-year or 12,000 mile warranty covering parts on all vehicles it sells. The dealer's experience shows that warranty expense averages about 3% of a car's selling price. During July, Victory sold 7 cars for a total of $105,000. The entry to record the estimated expense and liability related to its July sales is:

A) Debit Warranty Expense $3,150; credit Sales $3,150.
B) Debit Warranty Expense $3,150; credit Estimated Warranty Liability $3,150.
C) Debit Sales $450; credit Estimated Warranty Liability $450.
D) Debit Warranty Expense $450; credit Estimated Warranty Liability $450.
E) Debit Sales Returns and Allowances $22,050; credit Parts Inventory $22,050.