Journal entries are prepared by an organization as they give important information that are utilized by auditors to analyze how financial transactions affect a business.
What are journal entries?
Journal entry is the act of keeping or making records of any economic or non-economic transactions. The transactions are listed in a financial journal showing the balance of debit and credit of the company.
As per the information, we have to prepare :
a) Journal entry to record this transaction on January 2, 2017, and on December 31, 2017 (assuming financial statements are prepared on December 31, 2017).
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 (2019–2020) for $800.
Hence, the journal entry relating to the sale of production equipments are prepared by the Grando Company as of 31 December 2017. Refer to the image attached.
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