QUESTION $1(60$ marks$)$

Purple Press $($Pty$)$ Ltd is a company that sells various types of printers. Even though

their main business is the sale of printers, they also provide repairs and maintenance

services to those clients who request them. Purple Press $($Pty$)$ Ltd has a $31$ December

financial year$-$end.

Purple Press $($Pty$)$ Ltd entered into the following transactions with customers during

the $31$ December $2023$ financial year:

Transaction $1$:

On $5$ July $2023,$ Purple Press $($Pty$)$ Ltd sold $8$ Officejet $801$ printers to one of their

regular customers, Blue Laser $($Pty$)$ Ltd$.$ The printers were sold for R$1800$ per printer

and were delivered to Blue Laser $($Pty$)$ Ltd on $5$ July $2023.$ No additional services were

included with the purchase of the printers.

Due to Blue Laser $($Pty$)$ Ltd being a regular customer, Purple Press $($Pty$)$ Ltd offers

Blue Laser $($Pty$)$ Ltd a $5\%$ early settlement discount if their outstanding balance is

settled within $14$ days of purchase. Blue Laser $($Pty$)$ Ltd normally makes payment

within $14$ days and receives the early settlement discount.

Due to unforeseen circumstances, Blue Laser $($Pty$)$ Ltd was only able to make

payment for this purchase on $30$ July $2023.$

Purple Press $($Pty$)$ Ltd realises a $20\%$ mark$-$up on the cost price of an Officejet $801$

printer.

ANNEXURE I: FORMATIVE ASSESSMENT $2$

$93$ HFAC$232-1-$Jan$-$Jun$2024-$FA$2-$CP$-$V$2-03012024$

Transaction $2$:

On $15$ October $2023,$ Purple Press $($Pty$)$ Ltd entered into a contract with Plus Accounting $($Pty$)$ Ltd in terms of which Purple Press $($Pty$)$ Ltd will supply all of their offices with

brand new Business $358$ci printers.

Plus Accounting $($Pty$)$ Ltd has five offices, and they require two printers per office. Plus

Accounting $($Pty$)$ Ltd will pay an all$-$inclusive price of R$85000$ per printer. Besides

the printer unit, the purchase price also includes the set$-$up and configuration of each

of the printers, as well as a $16-$month maintenance contract.

The printers were delivered to Plus Accounting $($Pty$)$ Ltd on $29$ October $2023.$ The setup and configuration of the printers were done by Purple Press $($Pty$)$ Ltd$$s technicians

on $31$ October $2023.$ Plus Accounting $($Pty$)$ Ltd paid the full purchase price on $30$

November $2023.$

The following prices were applicable on the transaction date:

Cost price Sales price

Business $358$ci printer R$30000$ R$45000$

Technician services $($Note $1)$ R$990$ per hour R$1500$ per hour

Note $1$ Due to salary increases, the cost price and the sales price per technician

hour will increase by $3\mathrm{.}5\%$ effective $1$ January $2024$ and another $3\mathrm{.}5\%$ effective $1$

January $2025.$

The set$-$up and configuration of a Business $358$ci printer normally takes $45$ minutes

for a technician to complete.

For maintenance contracts Purple Press $($Pty$)$ Ltd charges their clients a standard $1\mathrm{.}5$

technician hours per month per printer, irrespective of whether the client makes use

of the full $1\mathrm{.}5$ hours per month.

ANNEXURE I: FORMATIVE ASSESSMENT $2$

$94$ HFAC$232-1-$Jan$-$Jun$2024-$FA$2-$CP$-$V$2-03012024$

REQUIRED:

$1\mathrm{.}1$ With reference to Transaction $1,$ discuss what Purple Press $($Pty$)$ Ltd needs to

consider in determining the transaction price for the printers sold to Blue Laser

$($Pty$)$ Ltd on $5$ July $2023,$ based on Step $3$ of the $5-$step approach in accordance

with IFRS $15$ of the International Financial Reporting Standards.

$(12$ marks$)$

$1\mathrm{.}2$ With reference to Transaction $1,$ prepare all the general journal entries

required in the records of Purple Press $($Pty$)$ Ltd for the $31$ December $2023$

financial year. Journal dates and narrations are not required.

$(14$ marks$)$

$1\mathrm{.}3$ With reference to Transaction $2,$ allocate the transaction price according to

Step $4$ of the $5-$step approach in accordance with IFRS $15$ of the International

Financial Reporting Standards. Note: Assume the discount included in the

transaction price to be attributable to all performance obligations included in the

contract.

$(14$ marks$)$

$1\mathrm{.}4$ With reference to Transaction $2,$ prepare all the general journal entries to

account for the contract to supply the printers to Plus Accounting $($Pty$)$ Ltd in

the records of Purple Press $($Pty$)$ Ltd for the $31$ December $2023$ financial year

in accordance with the IFRS $15$ of the International Financial Reporting

Standards. Note: The general journal entry relating to the maintenance contract

should be provided for in $1$ entry $($ie$.$ maintenance services for the applicable

period should be recognised in one general journal entry$).$ No general journal

entries are required for the initial purchase of the printers.

Journal dates are required. Journal narrations are not required.

$(20$ marks$)$