Question: Under IFRS, where a right to return exists, a) sales returns and allowances are recognized as contra accounts to Revenues and Accounts Receivable. b) a

Under IFRS, where a right to return exists,

a) sales returns and allowances are recognized as contra accounts to Revenues and Accounts Receivable.

b) a refund liability is recognized.

c) this right is disclosed in the financial statements; no accrual necessary.

d) this right does not need to be disclosed or accrued anywhere.

Part B

Marlin Pools sold 50 pool kits at $6,500 each. The cost of the kits to Marlin is $3,200. The terms of the sale include a right to return for full refund within 30 days of purchase. Marlin expects that 4 of the pool kits will be returned. Marlin follows IFRS 15.

Required:

Record the journal entries related to the above transactions. Assume 1 kit is returned within the 30 days.

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