Provision question

Please assist with the following question; Q 26 of the mock

Flyscreen an entity that is in the final stages of preparing its financial statements for the year ended 30 June 2016.

Flyscreen’s retail department has been asked to give some thought to the likelihood of goods sold being returned. Historically this has not been a problem – over the previous 25 years returns have consistently been around the 7% – 8% mark and a provision in anticipation of 7.5% of retail sales had been made.

This year, following much stricter quality control methods being applied in the production department, it is improbable that returns will exceed 2% of sales and could be as low as 1% of sales and even those returns will more than likely be able to be resold.

Last years’ revenues were $24, 000,000. Probably as a result of the improvement in Flyscreen’s reputation for quality goods, the sales figure this year has risen to $32,000,000 and gross profit margin improved from 20% to 25%.

What figure will appear in the statement of profit or loss for the movement in Flyscreen’s provision for sales returns.