During 2016, Rao Co. introduced a new line of machines that carry a one-year assurance warranty against manufacturers defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 3% in the year after sale. Rao spent $39,000 of warranty expenses in 2016.

Sales $ 1,600,000, Actual Warranty Expenditures $ 39,000 Please provide 2016 journal entries associated with the warranty and sale.