In the month of March the Digby Corporation received and delivered orders of 189

Question

In the month of March the Digby Corporation received and delivered orders of 189,000 units at a price of $15.00 for revenue of $2.835mil for their product Daze. Digby uses the accrual method of accounting and offers 30 day credit terms. By the end of May Digby had collected payments of $2.835mil for the March deliveries. How much of the collected $2.835mil should Digby show on the March 31st income statement and how much on the May 31st income statement?

$1.417mil in March;
$1.417mil in May

Select: 1 $0 in March;
$2.835mil in May $0.936mil in March;
$1.899mil in May $2.835mil in March;
$0 in May

$1.417mil in March;
$1.417mil in May

Explanation / Answer

Under the accrual method of accounting, revenue is recognized when goods/ services are delivered. So revenue will be recognized in March $2.835mil in March; $0 in May

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