In December Year 1, Lucas Corporation sold merchandise for $10,000 cash. Lucas estimated that the warranty obligation relating to this sale is $700. On February 12, Year 2, Lucas paid cash of $550 to settle a related warranty claim by this customer Which of the following summarizes the effect of the payment of cash to settle the warranty claim in Year 2 on the elements of the financial statements? A. B. C. D. Assets (430) (550) (550) (550) = Liab. = (550) = (550) = (550) = NA + + + + + Equity (120) NA D NA (550) Revenue NA NA N A NA - - - - - Expense 120 NA 550 550 = = = = = Net Inc. | Cash Flow (120) (430) OA NA (430) OA (550) (430) FA (550) (430) OA Multiple Choice O Option A 0 Option B Optionc Option D