Tech-Mania Computer Inc. sells computer servers to businesses for $8,000 each. The price includes a 3-year warranty that requires Tech-Mania to perform periodic services and repair any defective components. During 2020, Tech- Mania sold 3,000 servers. Based on past experience, the company estimates that total warranty costs for the 3-year period will be $350 per server.

Required (10 marks):

a) Calculate and record the entry related to the warranty for 2020.

b) In 2021, Tech-Mania incurred actual warranty costs of $380,000. Prepare the

journal entry to record these costs.

c) In 2021, Tech-Mania sold an additional 1,000 servers. At the end of 2021,

what is the ending balance in Warranty Liabilities on the balance sheet?