Dynamo Corporation manufactures toasters. Each toaster comes with a 5-year assurance-type warranty. The toasters sell...
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Dynamo Corporation manufactures toasters. Each toaster comes with a 5-year assurance-type warranty. The toasters sell for $40 each. During Year 1, Dynamo sells 500 toasters, for cash. Past experience shows that the average warranty costs are $4 each or $2,000 for these toasters. In Year 1, Dynamo pays $700 cash for warranty costs on the toasters sold that year. Required: Prepare Dynamos journal entries related to the sales and warranty in Year 1.
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