E13.20 (LO 6, 9) (Warranties-Assurance-Type) Cool Sound Ltd. manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale-2% of sales; second year after sale-3% of sales; and third year after sale-4% of sales. Sales and actual warranty expenditures for the first three years of business were: Sales Warranty Expenditures 2018 $ 810,000 $16,500 2019 1,070,000 47,200 2020 1,036,000 83,000 Instructions a. Calculate the amount that Cool Sound Ltd. should report as warranty expense on its 2020 income statement and as a warranty liability on its December 31, 2020 SFP using the assurance-type warranty (expense-based approach). Assume that all sales are made evenly throughout each year and that warranty expenditures are also evenly spaced according to the rates above