Waterway Hardware takes pride in being the shop around the corner that can compete with the big-box home improvement stores by providing good service from knowledgeable sales associates (many of whom are retired local handymen). Waterway has developed the following two revenue arrangements to enhance its relationships with customers and increase its bottom line.

1.

Waterway sells a specialty portable winch that is popular with many of the local customers for use at their lake homes (putting docks in and out, launching boats, and so on). The Waterway winch is a standard-manufacture winch that Waterway modifies so it can be used for a variety of tasks. Waterway sold 80 of these winches during 2020 at a total price of $20,300, with a warranty guarantee that the product was free of any defects. The cost of winches sold is $16,500. The assurance warranties extend for a three-year period with an estimated cost of $2,200. In addition, Waterway sold extended warranties related to 26 Waterway winches for two years beyond the three-year period for $430 each.

2.

To bolster its already strong customer base, Waterway implemented a customer loyalty program that rewards a customer with one loyalty point for every $10 of purchases on a select group of Waterway products. Each point is redeemable for a $1 discount on any purchases of Waterway merchandise in the following two years. During 2020, customers purchased select group products for $122,200 (all products are sold to provide a 45% gross profit) and earned 12,220 points redeemable for future purchases. The stand-alone selling price of the purchased products is $122,200. Based on prior experience with incentive programs like this, Waterway expects 7,800 points to be redeemed related to these sales. (Waterway appropriately uses this experience to estimate the value of future consideration related to loyalty points).

Prepare the journal entries for Waterway related to the sales of Waterway winches with warranties. (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.)

Account Titles and Explanation Debit Credit Cash 31480 Unearned Revenue 11180 Sales Revenue 20300 19 DONNA 0000000 (To record cash sale) Cost of Goods Sold 16500 Inventory 16500 (To record cost of goods sold)