Madison Co. sells merchandise of \(\$ 250,000\) in 2020, along with a two-year warranty (for years 2020 and 2021) for \(\$ 25\) per product. Warranty costs are estimated to be \(0.5 \%\) of sales. The company sold \(\$ 2,500\) of warranties in 2020 and incurred actual costs of \(\$ 800\) in 2020 related to the warranties. The company uses straight-line recognition of warranty revenue.

a. Record the sale of the merchandise and warranties, ignoring the cost of goods sold entry.

b. Record the warranty service costs for 2020 .

c. Record the warranty revenue recognized in 2020 .