Pharoah Growth Company is testing a number of new agricultural seeds that it has recently harvested. To stimulate interest, it has decided to grant five of its largest customers the unconditional right to return these products if not fully satisfied. The right of return extends for four months. Pharoah Growth sells these seeds on account for $1,600,000 (cost $600,000) on April 2, 2020. Customers are required to pay the full amount due by June 15, 2020. The company follows IFRS.

QUESTION:

A) Prepare the journal entry for Pharoah Growth on April 2, 2020, assuming Pharoah Growth estimates returns of 20% based on prior experience.