On August 1, Year 1, Pereira Corporation has sold 1,500 Wiglows to Mendez Company at $420 each. Mendez also purchased a 1-year service-type warranty on all the Wiglows for $10 per unit. In Year 1, On December 31, Pereira recorded warranty costs incurred in Year 1 of $9,000. Warranty costs for Year 2 of $3,000 were recorded on July 31. Required: 1. Prepare the journal entries for the preceding transactions. 2. Show how Pereira would report the items on the December 31, Year 1, balance sheet.