DAUSON sells carpets form several retail outlets. In previous years the company has undertaken responsibility for fitting the carpets in customer's premises. Customers pay for the carpets at the time they are ordered. The average length of time from the customer ordering a carpet to its fitting is 14 days. In previous years, DAUSON had not recognized a sale in income until the carpet had been successfully fitted as the rectification costs of any fitting error would be expensive. From 1st April 2020 DAUSON changed its method of trading by sub-contracting the fitting to approved contractors. Under this policy, the subcontractors are paid by DAUSON and they (the sub-contractors) are liable for any errors made in the fitting.

Because of this DAUSON is proposing to recognize sales when customers order and pay for the goods, rather than when they have been fitted.

Details of the relevant sales figures are;

Tshs.

000

23,000

Sales made in retail outlets for the year to 31.03.2021

Sales value of carpets fitted in the 14 days to 14.04.2020

1,200

Sales value of carpets fitted in the 14 days to 14.04.2021

1,600

Note: the sales value of the carpets fitted in the 14 days to 14th April 2020 are not included in the annual sales figure of Tshs.23 million, but those for the 14 days to 14th April 2021 are included.