On September 1,2013, Carolina Electronics Company has 1,000 Blu-ray players ready for sale. On October 1,2013, 890 are sold at $135 each with a 1-year warranty. Carolina estimates that the warranty cost on each Blu-ray player sold will probably average $12 per unit. During the final 3 months of 2013, Carolina incurred warranty costs of $3,750, and in 2014 warranty costs were $6,930.

1. Prepare the journal entries for the preceding transactions using the expense accrual method.

2. Prepare the journal entries for the preceding transactions using the modified cash basis method.