On December 31, 2015, Grando Company sells production equipment to Feliz Inc. for R$50,000. Grando 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, 2015. Grando estimates the prices to be R$48,800 for the equipment and R$1,200 for the cost of the warranty.

Instructions

(a) Prepare the journal entry to record this transaction on December 31, 2015.

(b) Repeat the requirements for (a), assuming that in addition to the assurance warranty, Grando sold an extended warranty (service-type warranty) for an additional 2 years (2017–2018) for R$800.