On January 1, 2016, XYZ Inc. delivers a machine to a buyer. The agreed upon price is $9,000. Included in this price is a 24-month service contract, which stipulates that the system will be fixed or replaced if it doesn't perform to certain specifications and 20 hours of service to maintain the system over this period. The stand-alone price for maintenance service is $2,000. The company also estimates that based on past experience, the warranty costs for defective machinery should be estimated at $450 per year. During Year 1, 8 hours of service are performed, as expected, at a cost of $800, and warranty work resulted in expenditures of $300.

Provide journal entries required for 2016, assuming that XYZ uses the cost deferral approach to account for its warranties.