Swifty Corp. provides at no extra charge a two-year warranty with one of its products, which was first sold in 2020. In that year, Swifty sold products for $2.04 million and spent $63,600 servicing warranty claims. At year-end, Swifty estimates that an additional $517,000 will be spent in the future to service warranty claims related to the 2020 sales. Prepare entries for the warranty that recognize the sale as a multiple deliverables with the warranty as a separate service that Swifty bundled with the selling price of the product. Ignore any cost of goods sold entry. Sales in 2020 occurred evenly throughout the year. Warranty agreements similar to this are available separately, are estimated to have a stand-alone value of $644,600, and are earned over the warranty period as follows: 2020 - 25%, 2021 - 50%, and 2022 - 25%. Also, prepare the entries to record the $63,600 expenditure for servicing the warranty during 2020, and the adjusting entry required at year-end, if any, under the revenue approach used for service-type warranties.

Date Account Titles and Explanation Debit Credit 2020 Cash 2040000 Sales Revenue Unearned Revenue (To record cash sale) 2020 Warranty Expense Materials, Cash, Payables (To record warranty expense) Dec. 31, 2020 Warranty Expense (To record year-end adjustment)