In October 20X2, the board game publisher Lumbra delivers 500 units game boxes to shops at a unit price of 80; the shops may return unsold boxes until 31 March 20X3 for a refund. On delivery, Lumbra estimated returns at 5 % of the boxes. At 31 December 20X2, the reporting date, no box has yet been returned, but as in-store sales are disappointing, Lumbra raises its estimate to 8 %. Calculate the refund liability at the reporting date and the reduction in revenue to be recognised.
- Number of boxes delivered
- 500
- Unit selling price
- 80
- Return rate estimated on delivery
- 5 %
- Return rate estimated at the reporting date
- 8 %