Neelix Auto Inc. (Neelix) sold a new limited-edition SUV to Marina Ltd.(Marina) on June 1,...
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Neelix Auto Inc. Neelix sold a new limitededition SUV to Marina LtdMarina on June for $ The SUV has a normal selling price of $ and thus the price charged to Marina is a special deal. Neelix imported the SUV from Europe at a landed cost of $ 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 fiveyear 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 $ per change. The oil changes cost $ per change in supplies Neelix also sells the extended warranty on a standalone basis for $ Neelix has a December year end
Instructions
A Use the five steps of revenue recognition from FRS 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
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