1 QUESTION 1 (20 MARKS) Green Ltd (hereafter Green) is a fresh produce retailer. They have been an active participant in the market since 2002, and their financial year ends on 31 March. Their inventory includes fresh vegetables such as tomatoes, potatoes, and lettuce. Green sources the freshest vegetables from farmers in the surrounding region, repackages the produce, and sells it to the public in their various stores. The following information relates to transactions pertaining to Green: 1. From 1 April 2019 Green made the decision to include a Green thumbs up guarantee on all the vegetables they sell. All produce will be sold with the guarantee that if the vegetables rot within 3 days of purchase, Green will supply the customer with fresh vegetables at no cost. On 1 April 2019 Green estimated that an average 15% of customers will return the vegetables as they have started to rot within the 3 days. By the end of the 2010 year of assessment, it was noted that in actual fact 12% of all sales for the year were returned due to rotting and all returns were made on the third day after the sale. Due to the increase in customer satisfaction Green has decided to continue with this guarantee into the foreseeable future. No journals have been passed with regards to this guarantee for the 2020 year as yet. 2. Green owns an investment property that it subsequently measured by applying the cost model. This property was bought on 1 April 2018 and consists only of land. On 31 March 2020 Green decided to change the way it measures the investment property from the cost model to the fair value model. This will result in a fairer presentation of the financial statements as it will provide reliable and more relevant information to the user of the financial statements. The investment property was bought at a cost of R 2 500 000. The fair value of the investment property is R 2 600 000 on 31 March 2009 and R 3 000 000 on the 31 March 2020. Other information: SARS will allow the deduction for the guarantee when the goods are actually returned and new produce given to the customer. SARS will grant no allowance on the investment property. The applicable tax rate is constant at 28% (capital gains tax at 14%). You may assume that there is no limitation on the recognition of deferred tax assets. You may ignore VAT. The 2020 financial statements were authorised for issue on 15 May 2020. Assume 360 days per year. REQUIRED: a) Provide all the journal entries required to account for the guarantee provided on all fresh produce in the financial statements of Green for the year ended 31 March 2020. Note: No closing journals are required. Journal narrations as well as an indication of where the journal entry will flow to (P&L, OCI, SFP or SCE) are required. (10) b) Disclose the appropriate note in the financial statements for the year ended 31 March 2020 to account for the change from cost model to fair value model with regards to the investment property.