Classical Corporation introduced a new line of commercial awnings in 2018 that carry a two-year warranty against manufacturer's defects. Based on their experience with previous product introductions, warranty costs are expected to approximate 3% of sales. Sales and actual warranty expenditures for the first year of selling the product were $3,000,000 and $42,500, respectively. The fiscal year ends on December 31. The amount of estimated warranty expense that Classical should report in its 2018 Income statement? $42,500. $47.500. $45,000 $90,000