Copy Mate Limited (Copy Mate) is a manufacturer of photocopiers. Equip Limited (Equip) operates a chain of office supplies stores throughout Asia. On 1 January 2021, Copy Mate entered into a three-year contract with Equip to supply its A1 photocopier, in all Equip stores at a discounted wholesale price of HK$950 per photocopier. The cost of manufacturing the A1 photocopier was HK$925. As part of the agreement, Copy Mate offered a 12-month warranty, whereby Copy Mate would repair any defects free to Equip customers within the first 12 months of purchase. Based on past experience, Copy Mate estimated that 0.5% of 2021 sales made by Equip would be returned by Equip customers for repair and estimated the cost of repairs for each unit to be equal to the units wholesale price. Equip sold 1,000,000 A1 photocopiers during the first 12 months of the contract. By 31 December 2021, Copy Mate had incurred HK$4,500,000 on materials and labour costs to repair A1 photocopiers returned during the warranty period. On 1 January 2022, Copy Mate sourced a new supplier for the drum component of the A1 photocopier, which was the main cause of 2021 defects. As a result of changing suppliers for the drum component, Copy Mate now estimated that 0.3% of 2022 sales would be returned by Equip customers for repair. For the year ended 31 December 2022, Equip sold 900,000 A1 photocopiers and Copy Mate incurred the following costs for repairing photocopiers. HK$210,000 in respect of 2021 sales; and HK$2,250,000 in respect of 2022 sales. Equip has indicated it would order 800,000 A1 photocopiers in 2023.

Required:

(a) Prepare all necessary journal entries with regard to the provision for warranties arising from the contract with Equip in the financial statements of Copy Mate for the reporting periods ended 31 December 2021 and 2022.

(b) What was the closing balance in the provision for warranties account as at 31 December 2022?

Show all workings clearly.