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Hi John
Wanda co allows customers to return faulty goods wothin 14 days of purchase. At 30 November 20×5 a provision of $6,548 was made for sales returns. At 30November 20×6, the provision was re calculated and should mow be $7,634. What should be reported in Wanda co’s statement of profit or loss for the year to 31 October 20×6 in respect of the provision?
The answer is ‘a charge of $1,086’
Mine was ‘a credit of $1,086’ because a provision should be increased by $1,086.
So I think expense should be debited and a provision should be credited.Which part do I understand wrong?
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