QUESTION 12.

8 (15 marks)

PART A

Debit Credit
Transaction 1:
Debtors / Receivable 16 350
Revenue 16 350
(5 450 x 3)

Debtors / Receivable 5 450

Refund liability 5 450

Transaction 2:
Bank 95 000
Contract liability 95 000

Interest expense 7 600

Contract liability 7 600
(95 000 x 8%)

PART B

R
Gym memberships:
- 550 x 1 200 x 2/6 220 000
- 120 x 1 800 x 1/6 36 000
Varsity team membership (4 275 x 100/115) 3 717
Merchandise sold (14 820 x 100/115) 12 887
Treadmill sold on behalf of client -
272 604

PART C

a) Allocation of transaction price

R
Washing machine 22 500
Grandfather clock (88 400 x 125/100) 110 500
Leather lounge suite (balancing) 22 000
155 000
b)
A refund liability is recognised:
 If an entity receives consideration from a customer and expects to
refund some or all of that consideration to the customer.
OR
 For amounts of consideration received (or receivable) to which the
entity does not expect to be entitled.
OR
 For amounts of consideration received (or receivable) while the criteria
for a contract to exist are not all met.