Dynamo Corporation manufactures toasters. Each toaster comes with a 5-year assurance-type warranty. The toasters sell for $40 each. During Year 1, Dynamo sells 500 toasters, for cash. Past experience shows that the average warranty costs are $5 each or $2,500 for these toasters. In Year 1, Dynamo pays $500 cash for warranty costs on the toasters sold that year. Required: Prepare Dynamos journal entries related to the sales and warranty in Year 1.