Coronado Corp. manufactures a wide range of equipment. The company's biggest seller is the Whatchamacallit, which sells for $4,520 each. Starting in 2020 Whatchamacallit now carries with it a 2-year manufacturer's warranty against manufacturing defects. From experience with similar products, Coronado Corp. has determined that each Whatchamacallit sold will average $1,010 in replacement parts (ignore labour costs for repairs). In 2020, the company sells 530 Whatchamacallits and incurred $165,000 in total repair costs relating to the manufacturer's warranty (replacement parts to come out of inventory).

In addition to this warranty, customers can purchase an optional extended warranty for $1,690 extra that extends the Whatchamacallit's warranty a additional 2 years. In 2020, 290 customers (of the 530 total sold) decide to purchase the optional extended warranty. Assuming the revenue is earned evenly over the two-year contract.

Coronado uses the assurance-type approach for the manufacturer's warranty and service-type approach for the extended warranty. Coronado follows ASPE:

Required:

1. Prepare the journal entries to record the sale of the Whatchamacallits, the manufacturer's warranty, and the extended warranties (sales would take place throughout the year; prepare only one entry at December 31, 2020 for the total sales). Ignore any cost of goods sold entry.

2. Assuming that the extended warranty period begins January 1, 2022 for all customers who purchased the extended warranty, prepare the journal entries at December 31, 2022 for the extended warranty. Assume that $196,650 in warranty costs were incurred in 2022.