Retallick Ltd sells boats and provides mooring services to its customers. They usually sell the boats for $30,000 each and mooring services for $5,000 per year paid annually in advance. Furthermore they consider the boats and mooring services to be distinct and account for them as separate performance obligations.

Retallick Ltd agrees to sell Coleman a boat and 1 year of mooring services on 1 July 2017 for $32,500. Finance is available from the local bank at 10% p.a. for customers wanting to borrow to finance the purchase.

Required:

For Retallick Ltd

1. Allocate the transaction price of $32,500 to the performance obligations
2. Prepare the journal entries on
   1. 1 July 2017.
   2. 31 July 2017 (assuming monthly financial reporting)