Majik Corporation offers a variety of electronic instruments, tooling equipment, technical reference books, and audio

training manuals. Majik uses warranties and premiums as sales promotion techniques to attract customers. Electronic

instruments and tooling equipment are sold with a $1-$year warranty for replacement of parts and labor. Estimated

warranty cost, based on past experience, is $1\mathrm{.}5\%$ of sales. The premium offered on technical reference books and audio

training manuals allows customers receive an MP$3$ player in exchange $250$ for coupons and $$25.$ Customers receive $1$

coupon for each dollar spent on technical reference books and audio training manuals. Each MP$3$ player costs $$35$ and

Makjik estimates $65\%$ of the coupons given to customers will be redeemed.

Majik's total $2020$ sales totaled $$8,250,000$ with $$6,500,000$ from electronic instruments and tooling equipment and

$$1,750,000$ from technical reference books and audio training manuals. Warranty replacement parts and labor costs

totaled $$124,000$ during $2020($ $$64,000$ of the work is related to pre$-2020$ sales$).$ A total of $6,500$ players used in the

premium program were purchased during the year and there were $1,400,000$ coupons redeemed in $2020.$ The balances

in the accounts related to warranties and premiums on January $1,2020,$ were as shown below.

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