Sheridan Company began selling game consoles on November 1, 2021. The company offers a 75-day warranty for defective merchandise. Based on past experience with other similar products, Sheridan estimates that 2.60% of the units sold will become defective in the warranty period, and that the average cost of replacing or repairing a defective unit is $20. In November, Sheridan sold 37,000 units and 590 defective units were returned. In December, Sheridan sold 46,000 units and 770 defective units were returned. The actual cost of replacing the defective units was $27,200.

Prepare a journal entry to accrue for the estimated warranty costs for the November and December sales at December 31, 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
Dec. 31	enter an account title to accrue warranty expense on December 31 No EntryWarranty ExpenseAccounts ReceivableWarranty LiabilityRepair Parts Inventory, Salaries Payable, Cash, etc	enter a debit amount	enter a credit amount
	enter an account title to accrue warranty expense on December 31 Repair Parts Inventory, Salaries Payable, Cash, etcWarranty ExpenseWarranty LiabilityAccounts ReceivableNo Entry	enter a debit amount	enter a credit amount
	(To accrue warranty expense.)

Prepare one summary journal entry at December 31, 2021, to record the cost of replacing the defective game consoles returned during November and December. (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
Dec. 31	enter an account title to record honouring warranty contracts on December 31 Warranty ExpenseAccounts ReceivableNo EntryRepair Parts Inventory, Salaries Payable, Cash, etcWarranty Liability	enter a debit amount	enter a credit amount
	enter an account title to record honouring warranty contracts on December 31 Accounts ReceivableWarranty LiabilityNo EntryRepair Parts Inventory, Salaries Payable, Cash, etcWarranty Expense	enter a debit amount	enter a credit amount
	(To record honouring warranty contracts.)

What amounts will be included in Sheridan's 2021 income statement and balance sheet at December 31, 2021, with regard to the warranty?

Income statement (Operating expenses)		$enter a dollar amount
Balance sheet (Current Liabilities)		$enter a dollar amount