During 2022, Gum Co. introduced a new product carrying a two-year assurance-type warranty against defects. Gum Co. uses the expense warranty approach. The estimated warranty costs related to dollar sales are 4%. Sales and actual warranty expenditures for the years ended December 31, 2022 and 2023 are as follows: Sales 2022 $150,000 2023 250,000 Actual Warranty Expenditures $2,250 6,250 $400.000 $8.500 What amount should Gum report as warranty expense on its 2023 income statement? Select one: O a. $7,500 Ob. $10,000 Oc $3,750 Od. $1,250 Oe. $6,250