During Year $1,$ its first year of operations, Benitez Company reported sales of $$360,000.$ At the end of Year $1,$ the company estimated its warranty obligation at $2\%$ of sales. During Year $1,$ the company paid $$4,800$ cash to

settle warranty claims. Which of the following statements is true?

Multiple Choice

All of these answer choices are correct.

Warranty expenses would decrease net earnings by $$7,200$ in Year $1.$

The warranties payable account has a balance of $$2,400$ at the end of Year $1.$

Cash decreased by $$4,800$ as a result of the accounting events associated with warranties in Year $1.$