By what amount should MN Plc's profit for the year ended 31 March 20X8 be reduced in respect of this? A. GHS2,600,000 B. GHS780,000 C. GHS600,000 D. GHS2,400,000
By what amount should MN Plc's profit for the year ended 31 March 20X8 be reduced in respect of this? A. GHS2,600,000 B. GHS780,000 C. GHS600,000 D. GHS2,400,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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MN Plc's draft statement of profit or loss for the year ended 31 March 20X8 includes GHS8m of revenue for credit sales made on a 'sale or return' basis. At 31 March 20X8 customers who had not yet paid had the right to return goods to the value of GHS2.6m. MN Plc applied a mark-up on cost of 30% on all of these sales. MN Plc's customers have in the past returned goods under this type of agreement. By what amount should MN Plc's profit for the year ended 31 March 20X8 be reduced in respect of this?
A. GHS2,600,000
B. GHS780,000
C. GHS600,000
D. GHS2,400,000
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