Hamlin Auto sold an automobile for $30,000 cash on January 2, 2015. The company estimates the assurance-type warranty costs on the automobile to be $700 (Hamlin will pay for the repairs for the first 36,000 miles or three years whichever comes first). The customer also purchased a service-type warranty for an additional three years or 36,000 miles (after the period covered by assurance type warranty is over) at a cost of $1,200. Hamlin incurred actual warranty costs of $500 in 2015 and $500 in 2016.

Hamlin records revenue on the service-type warranty on a straight-line basis.

1. Prepare journal entries to record sales of automobile and related service warranties on January 2.

2. Prepare journal entry to record actual warranty costs incurred in 2015.

3. Prepare journal entries to record estimated warranty liability at the end of 2015.

4. Prepare journal entry to record warranty expense and discharge of warranty liability in 2016.

5. After the initial three years, Hamlins additional service warranty would come into effect. Prepare a journal entry to record recognition of warranty revenue in 2018.

6. If the actual warranty costs are $150 in 2018, what the journal entry the company would make to record the expense?