(b) On 30 December 2020, David sold 250 identical items to a customer for 150 each. The items cost David 100 each to manufacture. The customer has the right to return the goods for a full refund within two months. After the two-month period has expired, the customer can no longer return the goods and payment becomes immediately due. David has entered into transactions of this type with this customer previously and can reliably estimate that 5% of the products are likely to be returned within the two-month period.

Required: Explain and show how the above transaction should be reported in the financial statements of David for the year ended 31 December 2020.