In the month of March the Baldwin Corporation received and delivered orders of 1

Question

In the month of March the Baldwin Corporation received and delivered orders of 170,000 units at a price of $15.00 for revenue of $2.550mil for their product Baker. Baldwin uses the accrual method of accounting and offers 30 day credit terms. By the end of May Baldwin had collected payments of $2.550mil for the March deliveries. How much of the collected $2.550mil should Baldwin show on the March 31st income statement and how much on the May 31st income statement? Select: 1

$2.550mil in March; $0 in May $0.

842mil in March; $1.708mil in May

$0 in March; $2.550mil in May

$1.275mil in March; $1.275mil in May

Explanation / Answer

$2.550mil in March; $0 in May $0

Since thecompany follows accrual basis it means that it will be recognised as sale for the month in which sale was made which was March. Thus it will be recognised as sale in March.

Collection of payment is immaterial.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.