Question $4\mathrm{.}3$

Africa Limited entered into a contract with a customer on $1$ January $207$ :

Africa Limited was to deliver $1000$ glass botties to Sunset Limited.

The contract price was $C300000$

An early settlement discount of $C30000$ is avaliable if payment is made before $31$ March $207.$

The expectation, at contract inception, was that it was likely that Sunset Limited would qualify for the early settiement discount.

Delivery date was on $1$ March $207($control passed on this date$).$

Sunset Limited settled its account on $5$ April $207.$

Required:

Draft a memorandum briefly explaining the accounting treatment of the sale of bottles during the year ended $30$ June $207.$ Support your discussion with calculations and journals.

Ignore loss allowances.