On January 1, 2020, Sheridan Ltd. sold on account 1,400 units of its product for a total price of $561,000 with a warranty guarantee that the products were free of any defects. The products have a one-year assurance-type warranty and Sheridan estimates that the cost will be $27,000. The cost of the units is $461,000. In addition, the company sold extended warranties related to 300 units for a one-year period beyond the one-year assurance period at a cost of $15,300. By the company's year-end, December 31, 2020, no warranty costs were incurred. By the company's year-end, December 31, 2021, $8,645 of warranty costs were incurred and paid in cash.

Prepare the appropriate journal entries for 2020 and 2021.(Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

January 1/20

(To record the sale)

January 1/20

December 31/20

December 31/21

(To record the cost of goods sold)

January 1/20

December 31/20

December 31/21

(To close out unused warranty)

December 31/21

(To record warranty costs)