Sierra Inc. manufacturers environmentally friendly appliances. It offers a two-year warranty standard. In Year 1, Sierra sold 450,000 toasters. Past experience has told Sierra that approximately 4 percent of the toasters require repair at an average cost of $10 each. During Year 1 , Sierra actually spends $38,000 and during Year 2 , Sierra actually spends $105,000. What is the balance in the warranty liability account at the end of year 2 ? $37,000 $38,000 $180,000 $143,000 Reporting contingent losses but not contingent gains is an example of which accounting principle?