Blue Company sells televisions at an average price of $836 and also offers to each customer a separate 3-year warranty contract for $90 that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold 321 televisions and 221 warranty contracts for cash. It estimates the 3-year warranty costs as $21 for parts and $41 for labor, and accounts for warranties separately. Assume sales occurred on December 31, 2020, and straight-line recognition of warranty revenues occurs.

Record any necessary journal entries in 2020.

What liability relative to these transactions would appear on the December 31, 2020, balance sheet and how would it be classified?

n 2021, Blue Company incurred actual costs relative to 2020 television warranty sales of $2,200 for parts and $4,150 for labor. Record any necessary journal entries in 2021 relative to 2020 television warranties. Use "Inventory" account to record the warranty expense.

What amounts relative to the 2020 television warranties would appear on the December 31, 2021, balance sheet and how would they be classified?