Merida Equipment Company sells computers for $1,500 each and, included in the purchase of all computers is a 2-year warranty that requires Merida Equipment Company to replace defective parts. For an additional $120, customers may purchase a three-year warranty which allows the customer to bring the computer in for a 'tune-up' annually. Based on past experience, the company has estimated the total 2-year warranty costs as $40 for parts and $60 for labor per unit. The three-year warranties are expected to cost $60 in labor. During 2017, the company sold 1,200 computers and half of customers purchased the additional warranty. Assume sales all occur at December 31, 2017 and the inventory cost on the computers is $1,000 per computer.

In 2018, Merida Equipment Company incurred actual warranty costs related to 2017 computer sales as part of the warranty included in the $1,500 purchase of the computers. Actual 2018 expenses related to this warranty were $16,000 for parts and $24,000 for labor.

Merida Equipment Company incurred $9,000 in labor expense related to the annual tune-up warranty.

Instructions:

(a)Record the sale of the computers and related warranties as of December 31, 2017.

(b)Record any necessary journal entry(ies) in 2018 related to the assurance warranty.

(c)Record any necessary journal entry(ies) in 2018 related to the service warranty.