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Prepare the journal entry to record revenue

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Reference no: EM132517399

Question - On December 31, 2018, ABC Company sells equipment to Z Inc. for €125,000. ABC includes a 1-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2018. ABC estimates the prices to be €122,000 for the equipment and €3,000 for the cost of the warranty.

Instructions -

(a) Prepare the journal entry to record revenue on this transaction on December 31, 2018.

(b) Repeat the requirements for (a), assuming that in addition to the assurance warranty, ABC sold an extended warranty (service type warranty) for an additional 2 years (2020-2021) for €2,000.

Reference no: EM132517399

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