Arrakis, Inc. manufactures spice harvesters. These harvesters have terrain sensors that process Spice Melange from desert sand. Each harvester is sold with an assurance-type warranty covering all parts and labor to protect against defects for a 2-year period. Customers may purchase additional service-type warranties to cover replacement sensors for three additional years. Loss due to sandworms is not covered under any warranty. All sales were recorded in cash (ignore sales tax). There have been no claims against the service-type warranty prior to 2025. Arrakis's sales, estimated, and actual costs are presented below:  

Instruction

A. Prepare the journal entries for 2022, 2023, and 2024 required to record the events related to the warranties using the accrual basis.

B. If other operating expenses are $327,000, how much is net income in 2024?

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Spice Harvesters - Cost per Unit Spice Harvesters - Sale Price per Unit Spice Harvesters - number of units sold Estimated warranty cost (% of sales) Additional Warranty (each) Number of Additional Warranties Sold Actual costs related to quality guarantee: Inventory $ $ $ $ During 2022 290,000 $ 480,000 $ 9 $ 5% 18,000 $ 3 200.000 Ś During 2023 290,000 $ 480,000 $ 7 $ 5% 18,000 $ 3 302.000 Ś During 2024 290,000 490,000 9 5% 20,000 2 170.000 Spice Harvesters - Cost per Unit Spice Harvesters - Sale Price per Unit Spice Harvesters - number of units sold Estimated warranty cost (% of sales) Additional Warranty (each) Number of Additional Warranties Sold Actual costs related to quality guarantee: Inventory $ $ $ $ During 2022 290,000 $ 480,000 $ 9 $ 5% 18,000 $ 3 200.000 Ś During 2023 290,000 $ 480,000 $ 7 $ 5% 18,000 $ 3 302.000 Ś During 2024 290,000 490,000 9 5% 20,000 2 170.000 Spice Harvesters - Cost per Unit Spice Harvesters - Sale Price per Unit Spice Harvesters - number of units sold Estimated warranty cost (% of sales) Additional Warranty (each) Number of Additional Warranties Sold Actual costs related to quality guarantee: Inventory $ $ $ $ During 2022 290,000 $ 480,000 $ 9 $ 5% 18,000 $ 3 200.000 Ś During 2023 290,000 $ 480,000 $ 7 $ 5% 18,000 $ 3 302.000 Ś During 2024 290,000 490,000 9 5% 20,000 2 170.000 Spice Harvesters - Cost per Unit Spice Harvesters - Sale Price per Unit Spice Harvesters - number of units sold Estimated warranty cost (% of sales) Additional Warranty (each) Number of Additional Warranties Sold Actual costs related to quality guarantee: Inventory $ $ $ $ During 2022 290,000 $ 480,000 $ 9 $ 5% 18,000 $ 3 200.000 Ś During 2023 290,000 $ 480,000 $ 7 $ 5% 18,000 $ 3 302.000 Ś During 2024 290,000 490,000 9 5% 20,000 2 170.000 Spice Harvesters - Cost per Unit Spice Harvesters - Sale Price per Unit Spice Harvesters - number of units sold Estimated warranty cost (% of sales) Additional Warranty (each) Number of Additional Warranties Sold Actual costs related to quality guarantee: Inventory $ $ $ $ During 2022 290,000 $ 480,000 $ 9 $ 5% 18,000 $ 3 200.000 Ś During 2023 290,000 $ 480,000 $ 7 $ 5% 18,000 $ 3 302.000 Ś During 2024 290,000 490,000 9 5% 20,000 2 170.000 Spice Harvesters - Cost per Unit Spice Harvesters - Sale Price per Unit Spice Harvesters - number of units sold Estimated warranty cost (% of sales) Additional Warranty (each) Number of Additional Warranties Sold Actual costs related to quality guarantee: Inventory $ $ $ $ During 2022 290,000 $ 480,000 $ 9 $ 5% 18,000 $ 3 200.000 Ś During 2023 290,000 $ 480,000 $ 7 $ 5% 18,000 $ 3 302.000 Ś During 2024 290,000 490,000 9 5% 20,000 2 170.000