In its first year operation in 2020, Macy Furniture sells a line of products that carry a three-year warranty against defects at no extra charge. Based on industry experience, the estimated warranty costs are as follows: first year following the year of sale, 1% of sales; second year following the year of sale, 3% of sales; and third year following the year of sale, 5% of sales. Sales and actual warranty expenditures for 2020 were $200,000 and $1.500, respectively. The amount of warranty expense that Macy Furniture should report in its 2020 income statement is O $18,000. $16,500 O $19.500 $1.500