Pina Colada Corporation 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 sale2% of sales; second year after sale3% of sales; and third year after sale4% of sales. Sales and actual warranty expenditures for the first three years of business were:

		Sales			Warranty Expenditures
2018		$770,000				$16,100
2019		1,120,000				46,400
2020		1,054,000				85,500

(a) Calculate the amount that Pina Colada 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.

Warranty expense		$enter a dollar amount
Warranty liability		$enter a dollar amount