Panera Bread builds sandwiches. Starting on 1/1/2013, the company began to provide a 1-year warranty for all Sandwiches sold. The company estimates that the cost of warranty claims will average $110 per sandwich sold. During 2013, the company sold 65,000 sandwiches. By the end of 2013, some of those sandwiches had already been returned for warranty repair and the company had spent $3,161,000 on those repairs during 2013. To keep within the standard of GAAP, how much should Panera Bread report on its 2013 income statement under warranty expense? 1) $3,161,000 2) $7,150,000 3) $3,989,000 4) $3,575,000