PandaCo allows customers to return faulty goods within 14 days of purchase. At 30 November 20X5 a

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Question:

PandaCo allows customers to return faulty goods within 14 days of purchase. At 30 November 20X5 a provision of $6,548 was made for sales returns. At 30 November 20X6, the provision was re-calculated and should now be $7,634 What should be reported in PandaCo's statement of profit or loss for the year to 31 October 20X6 in respect of the provision?

A. A charge of $7,634

B. A credit of $7,634

C. A charge of $1,086

D. A credit of $1,086