On January 1, 2020, Ivanhoe Ltd. sold on account 1,000 units of its product for a total price of $571,000 with a warranty guarantee that the products were free of any defects. The products have a one-year assurance-type warranty and Ivanhoe estimates that the cost will be $26,200. The cost of the units is $471,000. In addition, the company sold extended warranties related to 600 units for a one-year period beyond the one-year assurance period at a cost of $16,700. By the companys year-end, December 31, 2020, no warranty costs were incurred. By the companys year-end, December 31, 2021, $9,245 of warranty costs were incurred and paid in cash. Prepare the appropriate journal entries for 2020 and 2021.

The answers in red boxes are wrong.

Date Account Titles and Explanation Debit Credit January 1/20 Accounts Receivable 587700 Warranty Expense 26200 Sales Revenue 571000 Unearned Revenue 16700 26200 Warranty Liability (To record the sale) January 1/20 Cost of Goods Sold 471000 Inventory 471000 (To record the cost of goods sold) December 31/20 , No Entry No Entry (To close out unused warranty) December 31/21 Warranty Expense 9245 Warranty Revenue 0 9245 No Entry No Entry (To record warranty costs)