Eastern Company sells products covered by a 3-year warranty. Based on past experience of other entities in the industry, Eastern expects to incur warranty costs equal to 1 . of sales. Eastern's sales were $45,000 in 2013 and $50,000 in 2014 . In 2014, the company spent $200 to repair goods sold in 2013 and $300 to repair goods sold in 2014 . Eastern received no warranty servicing demands from its
customers in 2013 . the company's first year of operations. What is the balance in the warranty liability account on January 1 . 2015?
a. $450
b. $500
c. $300
d. $0
A
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