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Question 2 (Topic tested: Sale with a volume discount incentive) On 1 January 2016 Deepa Bhd began an contract to sell goods to a third

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Question 2 (Topic tested: Sale with a volume discount incentive) On 1 January 2016 Deepa Bhd began an contract to sell goods to a third party, Ruba Bhd. The price of the goods was set at $100 per unit for all sales in the period ending 31 December 2017. However, if sales of the product to Ruba Bhd exceed 60,000 units in the period ending 31 December 2017, then the selling price of all units is retrospectively set at $90 per item. Sales of the goods to Ruba Bhd in the nine-month period ending on 30 September 2016 totaled 20,000 units and this volume of sales per month was not expected to change before 31 December 2017. However, in the year ended 30 September 2017, total sales of the goods to Ruba Bhd were 35,000 and based on current orders from Ruba Bhd, the estimate was revised. The directors of Deepa Bhd estimated that the total sales of the goods to Ruba Bhd in the period ending 31 December 2017 would be more than 60,000 units. (10 marks) Required: Explain and show how the transactions above would be reported in the financial statements of Deepa Bhd for the year ended 30 September 20X7

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