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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
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 Maintenance agreement $16,500 $ 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: Prepare the journal entries for the above transactions that GAS should record for the 2019 and 2020 fiscal years. (6 marks)
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