Pronghorn 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 sale3% of sales; second year after sale5% of sales; and third year after sale6% of sales. Sales and actual warranty expenditures for the first three years of business were:

		Sales		Warranty Expenditures
2021		$760,000			$16,000
2022		1,060,000			46,200
2023		1,009,000			82,500

(a) Calculate the amount that Pronghorn should report as warranty expense on its 2023 income statement and as a warranty liability on its December 31, 2023 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
Warranty liability