The following events occurred during the year ended 30 June 2019 for Taming Bhd, a company involved in manufacturing of electrical goods:

1. Taming Bhd has been practicing a policy of allowing its customers to return faulty goods within 3 months from the date of sale, even though the company has no legal obligation to do so. Based on the past experience, it was probable that there would be such returns. Taming Bhd estimates that such returns usually amount to RM3,000 annually.

2. On 1 August 2018, Taming Bhd sued one of its suppliers for failure to provide materials as specified in the contract. Based on the advice from Taming Bhd's lawyers it was virtually certain that the company would win the case and expected to be awarded for compensation. As at 30 June 2019, the court ordered the supplier to pay Taming Bhd RM250.000. As at the year end, Taming Bhd did not yet receive the money.

3. On 1 July 2018, Taming Bhd had terminated the service of a sales director for acting outside his authority. As a result, the former sales director submitted a notice of his intention to claim substantial damages for unfair dismissal. On 1 April 2019 a claim for RM300.000 was received by Taming Bhd. The investigation is still on-going and Taming Bhd's legal advisors believe that there is a possibility the company will be held liable.

Required:

a. Discuss the accounting treatment for the above events in accordance with the MFRS137 Provisions, ContingentLiabilities and Contingent Assets. (8 marks)

b. Advise the management of Taming Bhd on the appropriate journal entries for the above transactions. (4 marks)

c. Construct the Statement of Profit or Loss (extract) and the Statement of Financial Position (extract) for the year ended 30 June 2019. (4 marks) (Total: 23 marks)