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G Equipment Company sold 600 Rollomatics during 2011 at $4,000 each. During 2011, Gonzalez spent $30,000 servicing the 2-year warranties that accompany the Rollomatic. All applicable transactions are on a cash basis.

Instructions (a) Prepare 2011 entries for Gonzalez using the expense warranty approach. Assume that Gonzalez estimates the

total cost of servicing the warranties will be $150,000 for 2 years. (b) Prepare 2011 entries for Gonzalez assuming that the warranties are not an integral part of the sale. Assume that

of the sales total, $200,000 relates to sales of warranty contracts. Gonzalez estimates the total cost of servicing the warranties will be $150,000 for 2 years. Estimate revenues earned on the basis of costs incurred and estimated costs.