MULTIPLE CHOICE: Choose the best answer and place it on the line alongside each question. - 1. According to the matching principle, warranty costs related to items sold should be reported as an According expense in the same accounting period as: the sales revenue is reported as income; B. the warranty repairs are made; the warranty period expires; cash is received from customers. C. Use the following to answer questions 2 and 3. Road Runner Company, which began operations in early 2020, sells merchandise with a one year warranty. In 2020, sales were 2,500 units. It is estimated that warranty repairs will average $10 per unit sold. In 2020, Road Runner spent $7,500 making repairs under warranty. Total warranty expense reported by Road Runner on its year end December 31, 2020 income statement is: A. $7,500 $25,000 $17,500 D. $0 C The warranty payable liability reported by Road Runner on its year end December 31, 2020 balance sheet is: A. $7,500 $17,500 $0 D. When a contingent liability is probable and can be estimated it should be: ignored; disclosed in the notes to the financial statements; reported as a liability on the balance sheet and an expense on the income statement; reported on the balance sheet as a contra fixed asset