Recording Service-Type Warranty Liability Madison Co. sells merchandise for $100,000 in 2020, along with a two-year warranty (for years 2020 and 2021) for $25 per product. Warranty costs are estimated to be 0.5% of sales. The company sold $1,000 of warranties in 2020 and incurred actual costs of $320 in 2020 related to the warranties. The company uses straight-line recognition of warranty revenue. a. Record the sale of the merchandise and warranties, ignoring the cost of goods sold entry. Assume cash sales. b. Record the warranty service costs for 2020. c. Record the warranty revenue recognized in 2020.

Recording Service-Type Warranty Liability Madison Co. sells merchandise for $100,000 in 2020, along with a two-year warranty (for years 2020 and 2021) for $25 per product. Warranty costs are estimated to be 0.5% of sales. The company sold $1,000 of warranties in 2020 and incurred actual costs of $320 in 2020 related to the warranties. The company uses straight-line recognition of warranty revenue. a. Record the sale of the merchandise and warranties, ignoring the cost of goods sold entry. Assume cash sales. b. Record the warranty service costs for 2020. c. Record the warranty revenue recognized in 2020. Note: List multiple debits or credits (when applicable) in alphabetical order. Account Name Dr. Cr. a. Cash 0 0 0 0 0 0 b. 0 0 - 0 0 C. 0 0 O O