Mario Melo Percussion sells high quality Latin percussion instruments. Their top$-$level Cajons have a $2-$year manufacturer$$s warranty. An extensive analysis of historical sales and warranty expenditures data over a $10-$year period provides the following information.

Warranty costs percentage of sales $2\mathrm{.}5\%$

Sales and warranty expenditures for the year $2024$ are as follows:

Sales of $$20,000,000.$

Actual warranty expenditures: $$173,000$

Required:

Prepare journal entries summarizing the above information and any aspects of the warranty that should be recorded during $2024.$

What amount should Mario Mela report as a liability at December $31,2024?$

What amount should Mario Mela report as an expense associated with the warranty on its December $31,2024$ income statement?