SumOne Limited is a retail store with a 30 June year-end. The company recorded the following: 2021 (Rands) Sales – May 220 000 Sales – June 360 000 Refunds paid out in current year (relating to the prior year provision) 53 880 Refunds provision balance on 30 June 2020 55 850 You can assume all sales are on credit and that SumOne Limited applies a 25% markup on the cost price of all goods. The company’s refund policy states that customers can return goods within 60 days (two months) of purchase if they can provide proof of purchase. Experience shows that 8% of sales are returned in the first month following the sale, and 5% are returned in the second month. REQUIRED: 1.) Prepare the short-term provisions (provisions for refunds) note to the financial statements of SumOne Limited for the financial year ended 30 June 2021. Comparative amounts are not required.
SumOne Limited is a retail store with a 30 June year-end.
The company recorded the following:
2021 (Rands)
Sales – May
220 000
Sales – June
360 000
Refunds paid out in current year (relating to the prior year provision)
53 880
Refunds provision balance on 30 June 2020
55 850
You can assume all sales are on credit and that SumOne Limited applies a 25% markup on the cost price of all goods.
The company’s refund policy states that customers can return goods within 60 days (two months) of purchase if they can provide proof of purchase. Experience shows that 8% of sales are returned in the first month following the sale, and 5% are returned in the second month.
REQUIRED:
1.) Prepare the short-term provisions (provisions for refunds) note to the financial statements of SumOne Limited for the financial year ended 30 June 2021. Comparative amounts are not required.
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