Indigo Hardware takes pride as the shop around the corner that can compete with the big-box home improvement stores by providing good service from knowledgeable sales associates (many of whom are retired local handymen). Indigo has developed the following two revenue arrangements to enhance its relationships with customers and increase its bottom line.

1.		Indigo sells a specialty portable winch that is popular with many of the local customers for use at their lake homes (putting docks in and out, launching boats, etc.). The Indigo winch is a standard manufacture winch that Indigo modifies so the winch can be used for a variety of tasks. Indigo sold 60 of these winches during 2020 at a total price of $18,600, with a warranty guarantee that the product was free of any defects. The cost of winches sold is $17,600. The assurance warranties extend for a 3-year period with an estimated cost of $1,800. In addition, Indigo sold extended warranties related to 20 Indigo winches for 2 years beyond the 3-year period for $400 each.
2.		To bolster its already strong customer base, Indigo implemented a customer loyalty program that rewards a customer with 1 loyalty point for every $10 of purchases on a select group of Indigo products. Each point is redeemable for a $1 discount on any purchases of Indigo merchandise in the following 2 years. During 2020, customers purchased select group products for $101,000 (all products are sold to provide a 45% gross profit) and earned 10,100 points redeemable for future purchases. The standalone selling price of the purchased products is $101,000. Based on prior experience with incentives programs like this, Indigo expects 9,600 points to be redeemed related to these sales (Indigo appropriately uses this experience to estimate the value of future consideration related to bonus points).

(c)

Prepare the journal entries for the bonus point sales for Indigo in 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Do not round intermediate calculations. Round final answers to 0 decimal places.)

Account Titles and Explanation	Debit	Credit
(To record sales)
(To record cost of goods sold)