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This is a note to the trial balance question. The sale figure in the trial balance is 9750k.
(a)?Sales include goods which have been sold with a price tag that includes “free” servicing for the next 3 years. The amount included in Sales for this warranty income is £600k. Assume that the sales of goods giving rise to this income arose evenly throughout the year.
In the answer it says that we recognise 100k as sale and 500k as deferred income I do not understand why.
Is it maybe because, ON AVERAGE, the sales since this warranty was given took place half way through this year so only half a year out of the three year warranty period on average has been used up this year
Does that do it for you?
NB – better to ask this on the Ask ACCA Tutor page if you want to guarantee getting an answer from me!
I’m sorry I just realised I posted in the forum. So if they is a similar question should I always assume that for the first half of the year is the sale and the remaining years are all defrered income
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