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Make the journal entries for the transactions on january

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On January 1, 2019, Gandy's Auto Sales Ltd. (GAS) sold a used vehicle along with an 18-month maintenance agreement that covers all repairs during that time. The total amount received from the customer was $17,900. The stand-alone prices of the vehicle and the agreement are as follows:

Vehicle                             $16,500

Maintenance agreement      $ 2,500

The maintenance agreement revenue is recognized with the passage of time. The cost of the vehicle to GAS was $13,000, and GAS uses a perpetual inventory system. GAS has a June 30 year end and reports using IFRS.

Required:

Problem 1: Prepare the journal entries for the above transactions that GAS should record for the 2019 and 2020 fiscal years.

Reference no: EM132623306

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