Benitez Co.had sales of $800,000 in 2016.The company expects to incur warranty expenses amounting to 3% of sales.There were $13,000 of warranty obligations paid in cash during 2016.Based on this information:

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The warranty expense is 3% of $800,000, which is $24,000, decreasing net earnings. Cash decreases by $13,000 due to warranty payments. The warranties payable account increases by $24,000 (expense) minus $13,000 (payments), resulting in an $11,000 increase.