Best Buy is able to forecast and anticipate the costs of repairing defective sets with Notgreat accuracy, using a large database of past failures by different brands and even models. In the past, Best Buy had set up the necessary infrastructure for repairing defective sets. Most parts were ordered from manufacturers and often covered under the manufacturer warranty. Much of the costs were fixed in nature, including employee salaries and overheads to set up the repair facilities. Recently Best Buy has started outsourcing these services aggressively. Because the entire contract is outsourced as soon as it is entered into, Best Buy does not deal with uncertainties of repairing defective sets.

The illustration below provides an example of the sale and a three$-$year warranty for a TV set:

US Dollars TV Set Warranty Total

Sales Price $10002101210$

Direct Cost $950751025$

Gross Profit $50135185$

As per US GAAP $($and IFRS$)$ Best Buy needs to account for the warranty on the basis of $\%$ of completion method.

a$.$ Show journal entries $($of $3$ years$)$ for how the above transactions are accounted for in Best Buy$$s books. You can assume that all revenues and costs are on cash basis. Also assume outsourcing.