During Year $1,$ its first year of operations, Benitez Company reported sales of $$260,000.$ At the end of Year $1,$ the company estimated its warranty obligation at $3\%$ of sales. During Year $1,$ the company paid $$3,300$ cash to settle warranty claims. Which of the following statements is true?

Multiple Choice

The warranties payable account has a balance of $$4,500$ at the end of Year $1.$

Cash decreased by $$3,300$ as a result of the accounting events associated with warranties in Year $1.$

All of these answer choices are correct.

Warranty expenses would decrease net earnings by $$7,800$ in Year $1.$