Carly’s began operations early this year, selling a product that carries a 1-year warranty; any defective units will be replaced within that time. The product has a cost to Carly of $55 and a selling price of $108. Carly estimates that approximately 1% of the units will be defective. During the year, 62,000 units were sold and 275 units were returned for replacement. What is the balance in Warranty Payable at the end of the current year?