Hitech Appliance Company's accountant has been reviewing the firm's past television sales. For the past two years, Hitech has been offering an extended service contract on all televisions sold. With the purchase of a television, the customer has the right to purchase a 3-year service contract for an extra $75. Information concerning past television and warranty contract sales follows.

Plasma-All Model II Television..................................................... 2013..... 2012

Television sales in units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700....... 590

Sales price per unit. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . $900...... $800

Number of service contracts sold. . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 420....... 380

Expenses relating to television warranties. . . . . . . . . . . . . . . . . . . . . . . . . . $8,250.... $4,240

Hitech's accountant has estimated from past records that the pattern of repairs has been 32% in the first year after sale, 40% in the second year, and 28% in the third year. Give the necessary journal entries related to the service contracts for 2012 and 2013. In addition, indicate how much profit on service contracts would be recognized in 2013. Assume sales of the contracts are made evenly during the year.