Balance in estimated warranty payable

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KB Corporation sells a product that includes a 2-year warranty. During that time, if the product breaks, it may be returned for replacement. At the beginning of 2010, Estimated Warranty Payable had a $500 credit balance. During 2010, 6,000 units were sold; historically, approximately 1% of the units prove to be defective. Each unit costs $50 and sells for $150. If 50 units are actually replaced during 2010, what is the remaining balance in Estimated Warranty Payable at the end of 2010?

A. $1,000

B. $2,000

C. $3,000

D. Cannot be determined from the information given.

Reference no: EM132203883

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