Senford PLC entered into a contract to sell 3,000 telephones each with a two-year provider contract. The total cost of the contract was €120 per month payable at the end of the month. The phones were bought for cash from a supplier for €480 each and the cost of providing the telephone service is estimated at €30 a month for each phone. Senford PLC sells two-year service contracts (without supplying a phone) for €90 a month. The balance date for the company is three months after the date of the sales.

Required:

(a) Prepare all the journal entries for the current financial year that are possible from the data given. (Ignore financing costs.)

(b) Show the disclosures which will be necessary in the annual report in relation to these phone contracts. Show your calculations.