Final answer:
The true statement is that the replacement of defective products under warranty is accounted for in the first year, reflecting the accounting principle of matching revenues with related expenses. The estimated warranty costs are $3,000, based on 3% of sales, with actual replacements costing $2,000 in the first year and an expected $1,000 in the second year.
Step-by-step explanation:
The student is asking about the accounting treatment of warranty costs in a company's financial reports. When the company made sales of $100,000 and estimated warranty costs at 3% of sales, it means that they expected to incur $3,000 in warranty expenses. Accounting principles require that these estimated warranty costs be matched with the related sales revenue and recorded in the same period the sales are made. Therefore, the company would record an estimated warranty liability of $3,000 in its first year.
This leads us to the conclusion that option D) Replacement of defective products is recorded in the first year is the true statement. This reflects the matching principle in accounting, where expenses are recorded in the same period as the revenues they help to generate. The warranty costs aren't only recorded in the second year (option A) since an estimate was recorded when the sale was made. There is no information given to support the statement that defective warranted products are not replaced (option B), and the payment status of customer accounts (option C) is not relevant to the question about warranty costs recording.