Chefs4U Limited is a retailer that specialises in high-end kitchen equipment specifically designed for chefs. Chefs4U Limited entered the following transactions with Chef Robyn:

Knifes

On 1 July 2020, they sold a set of knives to Chef Robyn for R55 000. To motivate Chef Robyn to settle the amount outstanding promptly, Chefs4U Limited offered her a settlement discount of 10% should she settle the amount by 31 August 2020. Chef Robyn has a record of paying within terms.

Knife Sharpening

On 1 July 2020, they also offered Chef Robyn a service to sharpen her knives every two months for a period of one year after the transaction date. The total stand-alone selling price of this service amounts to R9 000, and it was agreed that Chef Robyn would settle the amount as and when the sharpening is performed. Each sharpening has equal value.

Chef Robyn handed her knives in on 30 August 2020 for the first sharpening, and Chefs4U Limited returned the sharpened knives to her on 31 August 2020, after she paid for the service.

Set of pans

Chef Robyn also purchased a complete set of specialised pans for her kitchen on 1 July 2020, which had a selling price of R120 000 on 1 July 2020. Chefs4U Limited did not offer any settlement discount on this transaction but agreed that Chef Robyn settles the outstanding amount in six two-monthly instalments of R22 000 payable in arrears for one year. The first instalment is payable on 31 August 2020, and Chefs4U Limited determined the borrowing rate applicable to Chef Robyn to be 16,7583% per year. 8 HFAC232-1-Jul-Dec2021-FA2-CP-V2-02072021

Chef Robyn made an electronic payment of R73 000 to Chefs4U Limited on 31 August 2020.

The amount is made up as follows:

Set of knives (less 10% discount) R49 500

Knife sharpening service R1 500

Instalment on pans R22 000

R73 000

REQUIRED:

4.1) Prepare the journal entries required in the records of Chefs4U Limited on 1 July 2020. (7 marks)

4.2) Prepare the journal entries required in the records of Chefs4U Limited on 31 August 2020. (10 marks)

4.3) Assume that Chefs4U Limited sells their products with a 60-day money-back guarantee if the customer is not satisfied with the product, and they expect that 5% of products sold will be returned and refunded. Briefly discuss the general recognition and measurement principles appliable in terms of the requirements of IFRS 15 in such case.