Z allows customers to return faulty goods within 7 days of purchase. At 31 December 2013 a provision of $1,170 was made for the sales returns. At 31 December 2014, the provision was re-calculate and showed to be $2,835.
What should be reported in Z's statement of profit or loss for the year to 31 December 2014 in respect of the provision?
Provision Account
| DEBIT $ | CREDIT $ | ||
| Opening balance | 1,170 | ||
| Additional charges | 1,665 | ||
| Closing Balance | 2,835 |
Income statement
| DEBIT $ | CREDIT $ | ||
| Additional Charges | 1,665 |