Make the general journal entries to record the transaction

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Reference no: EM132508761

Ernst Ltd provides a bundled telecommunications service contract to Arthur Ltd. It charges Arthur Ltd $35 000 for the initial connection to its network and two ongoing services - access to the network for one year and 'on-call troubleshooting' advice for that year. Arthur Ltd pays the $35 000 on 1 July 2016. Ernst Ltd determines that, if it were to charge a separate fee for each service if sold separately, the fee would be:

Connection fee$ 5 000

Access fee$12 000

Troubleshooting$23 000

The end of Ernst Ltd's reporting period is 30 June each year.

Required

Question 1: Prepare the general journal entries to record this transaction in accordance with AASB 118 for the year ended 30 June 2017. Show all workings.

Reference no: EM132508761

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