Carpenter Inc.estimates warranty expense at 2% of sales.Sales during the year were $4 million and warranty expenditures were $44,000.What was the balance in the Warranty Liability account at the end of the year?

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The estimated warranty expense is 2% of sales, which equals $80,000 ($4 million x 2%). However, the actual warranty expenditures were only $44,000, meaning that the company overestimated their warranty expense by $36,000 ($80,000 - $44,000). Therefore, the balance in the warranty liability account at the end of the year would be lower than the estimated expense and would be equal to $36,000.