Question: Smart (Pty) Limited signed a contract with Studio X (the customer) on the 1 June 2020. The terms of the contract included the following: -

Smart (Pty) Limited signed a contract with Studio X (the customer)

Smart (Pty) Limited signed a contract with Studio X (the customer) on the 1 June 2020. The terms of the contract included the following: - Smart (Pty) Ltd would supply and install a state-of-the-art jacuzzi tub on the 1 July 2020 after which it would be required to supply and install an extractor fan in the bathroom - The customer promised consideration of R25 000 payable by the 30th of September at the latest after both the jacuzzi and extractor fan are installed. - The contract is cancellable in the event of non-performance - The stand-alone selling prices for the supplied and fitted products are as follows: - Jacuzzi R20 000 - Extractor R5 000 - Smart (Pty) Ltd supply and install the jacuzzi on the 1st of July as agreed and the extractor on the 5th of August. Control over the jacuzzi and extractor passes to Studio X on this day. Amount owing by Studio X is paid over on the 25 September 2020. Required: 1. Prepare the journal entries for the year ended 31st December 2020 in respect of the above transactions in the books of Smart (Pty) Ltd. 2. What five criteria must be met to ensure a contract exists? 3. What is a wholly unperformed contract? (3)

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