Assume the same facts as in Question 4(b) but add the presence of a 7.5% value added tax on the sales and a 1% transaction cost paid to the supplier of credit card transactions.

Required:

(a) Show the entries to record the transactions associated with the sale and supply for years one, two and three. (Ignore imputed interest costs.)

(b) Provide the disclosures which would need to be made in the annual report at the end of the first year of the contract.