The Ciccollini Corporation sells a product for a stand-alone price of $2,000. The company also sells a three year extended warranty for a stand-alone price of $800. The extended warranty starts at the end of the regular warranty (included in the price) and ends at the end of the fourth year after the product was purchased. Customers have until the end of the first year to purchase the extended warranty. If a customer purchases the extended warranty at the same time as they purchase the product, they can purchase both for $2,600. Ciccollini estimates that the expenses incurred on servicing the extended warranty will be incurred evenly over the extended warranty period.

Assume a customer purchases a unit of product with the extended warranty on January 2, 20x6. Write the journal entries related to this purchase for the period January 2, 20x6 to December 31, 20x8.