Gonzales Co. provides warranties for many of its products. Its estimated warranty liability account had a balance of \(\$ 70,400\) at January 1, 2011. Based on an analysis of warranty claims during the past several years, the warranty expense for 2011 was established at 0.4 percent of sales. During 2011 , the actual cost of servicing products under warranty was \(\$ 32,200\), and sales were \(\$ 7,200,000\).

Required:

1. Compute the warranty expense that should appear on the company's income statement for the year ended December \(31,2011\).

2. What amount will be reported in the estimated warranty liability account on the statement of financial position as at December 31, 2011?