Trading Enterprises Ltd’s revenue amounts for the year ending 31 December 20x1comprises the following: 

NOTE N$ Invoice value of sales (including VAT at 14%) 798 000 

Instalments received on lay-by sales 1 80 000 

Consignment sales of all inventory on consignment 2 40 000 

Cash on delivery (COD) (including VAT) 3 57 000 

Trade discount received 30 000 

Sales on approval at invoice value, including VAT (excluded from above sales invoice value) 4 45 600 1 050 600

Notes 1. Past experience has shown that practically all lay-by sales are completed. N$10 000 of the amount represents initial small deposits made by customers who have not made any further payments. The balance represents amounts paid by customers who have made significant deposits during the year. Total lay by sales for the year were on N$100 000 (excluding VAT). None of the goods have been taken by customers yet; Trading Enterprises Ltd is not allowed to sell them to any other customer before the lay by period has lapsed.

2. The “inventory on consignment at cost” account shows a balance of N$5 000. All consignment sales are made by agents and the sales take place at a gross profit of 20% on selling price. The N$40 000 excludes VAT.

3. The balance on the receivable account for COD sales at the end of the year was N$11 400. The balance at the beginning of the year of the year was N$9 120. The customers are creditworthy.

4. Sales subject to approval are accounted for separately. Invoices with a VAT-inclusive value of N$20 727 relate to goods accepted by the customer. A further amount of N$13 473 (VAT inclusive) is presumed to be accepted as the time period for rejection has elapsed. All of these customers are considered to be creditworthy. However, based on past experience and the nature of the goods sold, Trading Enterprises Ltd cannot objectively say that the remainder of the goods will necessarily be accepted by the customers.

Required 

Calculate the amount of revenue to be recognized for the year ended 31 December 20x1.

Answer rating: 100% (QA)

Trading Enterprises Ltds revenue for the year ended 31 December 20x1 comprises the following NOTE N Invoice value of sales including VAT at 14 798 000 ... View the full answer