7. Howard Corp. sells extended warranties to its customers in addition to regular inventory sales. During 2020, customers purchased a total of 800 warranties for $60 each. By the end of 2020, $40,000 of the amount collected was still unearned. The warranty permits the customer to receive an inventory replacement if the item breaks during the first two years of its life assuming normal use. During 2020, 175 units of inventory were replaced at the cost of $100 each. How much warranty revenue and warranty expense, respectively, should be recognized on the 2020 income statement? Assume the company has a calendar year-end. Warranty Revenue for 2020 Warranty Expense for 2020 $ 8,000 $30,500 $48,000 $22,500 $ 8,000 $17,500 $48,000 S 9.500 E $24,000 $17.500 F $24,000 $ A B C. D 0