Prepare the entries concerning the sale and the warranty that the company would make from 30 September 20X1 through 30 September 20X3 under each of the following two assumptions:
1. Assume that warranty cost is in the form of an assurance.
2. Assume instead that CEC also sells the warranty as a separate service. CEC management estimates that of the $ 2 million total revenue, 6% should be allocated as revenue relating to the warranty. The warranty- related revenue will be recognized in earnings straight- line through the warranty period.