Neelix Auto Inc. $($Neelix$)$ sold a new limited$-$edition SUV to Marina Ltd$.($Marina$)$ on June $1,$ for $$193,750.$ The SUV has a normal selling price of $$216,250$ and thus the price charged to Marina is a special deal. Neelix imported the SUV from Europe at a landed cost of $$115,625$ As part of the sale, Neelix has included four free oil changes Marina can use within the first two years of purchase and an extended five$-$year dealership warranty to cover any potential problems that may occur within the first five years of purchase. Neelix has a service department that routinely provides oil changes to clients for $$311$ per change. The oil changes cost $$150$ per change in supplies Neelix also sells the extended warranty on a stand$-$alone basis for $$16,875.$ Neelix has a December $31$ year end

Instructions

A Use the five steps of revenue recognition from FRS $15$ to determine how Neelix should account for this transaction

B$.$ Prepare the journal entries Neel will record for the first year, assuming Marina used the first of the four oil changes on November $10.$