PART A $(46$ marks$)(83$ minutes$)$

The financial statements of Cupid Ltd for the year ended $31$ March $2023$

were presented to the board of directors for authorisation on $5$ May $2023.$

You have been requested to assist the inexperienced accountant to finalise the draft annual financial

statements of Cupid Ltd for the year ended $31$ March $2023.$ The following information relates to the draft

financial statements of Cupid Ltd for the year ended $31$ March $2023.$

$1.$ Revenue

The following revenue transactions have not been recorded yet in the accounting records of Cupid Ltd

for the year ended $31$ March $2023.$

$1\mathrm{.}1$ Buhrmansdrift School Contract

On $2.$ Warranty Cupid Ltd sells all its IBM laptops with a warranty to make good, by repair or replacement, manufacturing defects that become apparent within six months from the date of sale. The warranty is an assurance type warranty. Based on previous years$$ experience and the return history, it is estimated that approximately $7\%$ of the IBM laptops sold will be returned with a claim against the warranty. The warranty cannot be purchased separately and does not provide the customer with a service in addition to the assurance that the product complies with agreed$-$upon specifications. Cupid Ltd made a provision for warranty costs, based on an estimate that $7\%$ of IBM laptops sold will be returned, which amounted to R$178500$ for the year ended $31$ March $2023$ and R$63000$ for the year ended $31$ March $2022.$ The balance of the provision for warranty costs as at $31$ March $2021$ amounted to R$47250.$ Actual warranty costs paid in the $2023$ financial year, in respect of IBM laptops sold with a material defect during the year ended $31$ March $2022,$ amounted to R$61560.$ Actual warranty costs paid in the $2020$ financial year, in respect of IBM laptops sold with a material defect during the year ended $31$ March $2021,$ amounted to R$48800.$ Actual warranty costs and reversals for warranty costs are debited against the provision for warranty costs and have already been recorded in the accounting records of Cupid Ltd$.$ During the current financial year ended $31$ March $2023$ the manufacturer of IBM laptops started to provide Cupid Ltd with a full back$-$up guarantee for any manufacturing defects on these IBM laptops. At year end on $31$ March $2021,$ it is probable, but not virtually certain, that $60\%$ of the estimated warranty costs incurred by Cupid Ltd will be refunded by the manufacturer. $3.$ Licensing fees Software that runs on the Linus platform and sold by Cupid Ltd is subject to licensing fees payable $[$TURN OVER$]5$ FAC$3701102024$ QUESTION $1($PART A$)($continued$)$ two $(2)$ years in advance. On $1$ April $2021$ Cupid Ltd paid R$390000$ for software licensing fees to Linus Ltd$.$ The inexperienced financial accountant recorded the total licensing fees of R$390000$ as a prepayment in the statement of financial position of Cupid Ltd as at $31$ March $2022.$ The licensing fees was correctly deducted for current tax purposes for the financial year ended $31$ March $2022.$ No adjustment relating to the licensing fees have been made yet in the accounting records of Cupid Ltd$.$ The licensing fees amounted to R$16250$ per month. $4.$ Share Transactions $4\mathrm{.}1$ Option to purchase On $10$ February $2023$ the directors of Cupid Ltd obtained an option to purchase Agrinet Ltd and on $22$ February $2023$ approved the rights issue to finance the acquisition of Agrinet Ltd$.$ On $5$ April $2023$ the rights issue of $100000$ shares at R$20$ per share was fully taken up$.4\mathrm{.}2$ Dividends On $25$ March $2023$ Cupid Ltd declared a cash dividend of R$500000$ to all registered shareholders. The dividends, as well as the dividend tax, were only paid on $10$ April $2023.$ You can assume that all the registered shareholders of Cupid Ltd are natural persons. This dividend transaction has already been recorded in the accounting records of Cupid Ltd for the financial year ended $31$ March $2023.$ The dividend tax rate is $20\%.5.$ Taxation The SA Normal tax rate remained unchanged at $28\%$ for the past three years. The company provides for deferred tax on all temporary differences according to the statement of financial position approach. There are no other exempt or temporary difference except for those mentioned in the question. There is certainty beyond reasonable doubt that there will be sufficient taxable profit in future against which any deductible temporary differences can be utilised. $6.$ Assumptions $$ Assume all amounts are material. $$ Ignore the implications of value$-$added Added Tax $($VAT$).$

REQUIRED: $($a$)$ Prepare the necessary general journal entries to correctly record the revenue transactions in information $(1\mathrm{.}1)$ and $(1\mathrm{.}2)$ in the accounting records of Cupid Ltd for both the years ended $31$ March $2023$ and $31$ March $2022.$ Marks $16$ Your answer must comply with the requirements of IFRS $15,$ Revenue from contracts with customers. Ignore any tax implications.