On August 1, 2019, Pereira Corporation has sold 1,700 Wiglows to Mendez Company at $480 each. Mendez also purchased a 1-year service-type warranty on all the Wiglows for $12 per unit. In 2019, Pereira incurred warranty costs of $9,000. Costs for 2020 were $8,400.

Required:

1.	Prepare the journal entries for the preceding transactions.
2.	Show how Pereira would report the items on the December 31, 2019, balance sheet.