Riverbed Corporation sells DVD players. The corporation also offers its customers a 4-year warranty contract. During 2020, Riverbed sold 20,000 warranty contracts at $96 each. The corporation spent $187,000 servicing warranties during 2020, and it estimates that an additional $935,000 will be spent in the future to service the warranties.

Prepare Riverbeds journal entry for the recognition of warranty revenue. Assume the service costs are inventory costs.

Unearned Warranty Revenue
Warranty Revenue