Bridge to the Profession: Professional Research: FASB Codification, page 687.

(15 points) (b) Alvarado Company sells a machine for $6,500 under a 12-month warranty agreement that requires the company to replace all defective parts and to provide the repair labor at no cost to the customers. With sales being made evenly throughout the year, the company sells 600 machines in 2010 (warranty expense is incurred 40% in 2010 and 60% in 2011). As a result of product testing, the company estimates that the warranty cost is $370 per machine ($230 parts and $140 labor). Required: Assuming that actual warranty costs are incurred exactly as estimated, prepare the journal entries that would be made under application of the expense warranty accrual method for the following: (6 points) (16 points) (8 points) (Points : 45)