During Year 1, its first year of operations, Benitez Co. reported sales of $660,000. At the end of Year 1, the company estimated its warranty obligation at 4% of sales. During Year 1, the company paid $18,000 cash to settle warranty claims. Which of the following statements is true?

Cash decreased by $18,000 as a result of the accounting events associated with warranties in Year 1

Warranty expenses would decrease net earnings by $26,400 in Year 1.

All of these answers are correct

The warranties payable account has a balance of $8,400 at the end of Year 1