Chapelle Appliances sells diswashers for $1000 each which includes a 2 year warranty that requires the company to perform periodic services and to replace defective parts.

During 2020, Chapelle sold 450 diswashers on account. Based on past experience, the company has estimated the total 2-year warranty costs at $50 for labor

(Assume sales all occur at December 31, 2020)

In 2021, Chapelle Company incurred acutal warranty costs relative to 2020 diswasher sales of $2500 for parts and $3250 for labor

Instructions

Using the expense warranty approach, prepare the entries to reflect the above transactions (accrual method ) for 2020 and 2021.