A car rental company has a fleet of 32,000 cars. Every three months all the cars are given scheduled oil changes, rotation, and replacement of small components. The cost per car is $210, ($70 in parts and $140 for the wages of the in-house mechanics), $6,720,000 in total. As well, for half of the cars a satellite radio receiver was installed at a cost of $150 each (total $2,400,000). The gadget allows the car to receive satellite radio. The company will provide this service free and promote it heavily to increase rentals. This advertising campaign will cost $1,500,000. After the original free use of the satellite feature, the company will charge later users a fee for the use of satellite radio.
Prepare the necessary journal entry to record the above transactions. Provide a short justification for your chosen treatment.

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The Answer of A car rental company has a fleet of 32,000 cars. Every three months all the cars are given scheduled oil changes, rotation, and replacement of small components. The cost per car is $210, ($70 in parts and $140 for the wages of the in-house mechanics), $6,720,000 in total. As well, for half of the cars a satellite radio receiver was installed at a cost of $150 each (total $2,400,000). The gadget allows the car to receive satellite radio. The company will provide this service free and promote it heavily to increase rentals. This advertising campaign will cost $1,500,000. After the original free use of the satellite feature, the company will charge later users a fee for the use of satellite radio.
Prepare the necessary journal entry to record the above transactions. Provide a short justification for your chosen treatment.

A Car Rental Company Has a Fleet of 32,000 Cars