In 2019, Argo Computer Store had computer sales of $200,000. Each computer comes with a 1-year warranty against manufacturer defects. Argo expects warranty costs to be approximately 3% of sales. Actual warranty expenditures in January 2020 were $550.

a. Record the estimated warranties on December 31, 2019 based on 3% of 2019 sales.

b. Record the payment of the actual warranty expenditures of $550 in January of the following year.

1. Record the payment of the actual warranty expenditures of $550 in January of the following year.