(Warranties) Soundgarden Company sold 200 copymaking machines in 2004 for $4,000 apiece, together with a one-year warranty. Maintenance on each machine during the warranty period averages $330.

Instructions

(a) Prepare entries to record the sale of the machines and the related warranty costs, assuming that the accrual method is used. Actual warranty costs incurred in 2004 were $17,000.

(b) On the basis of the data above, prepare the appropriate entries, assuming that the cash basis method is used.