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

Question

In the month of March the Chester Corporation received and delivered orders of 124,000 units at a price of $15.00 for revenue of $1.860mil for their product Camp. Chester uses the accrual method of accounting and offers 30 day credit terms. By the end of May Chester had collected payments of $1.860mil for the March deliveries. How much of the collected $1.860mil should Chester show on the March 31st income statement and how much on the May 31st income statement? Select: 1 $0.614mil in March;
$1.246mil in May $0 in March;
$1.860mil in May $0.930mil in March;
$0.930mil in May $1.860mil in March;
$0 in May In the month of March the Chester Corporation received and delivered orders of 124,000 units at a price of $15.00 for revenue of $1.860mil for their product Camp. Chester uses the accrual method of accounting and offers 30 day credit terms. By the end of May Chester had collected payments of $1.860mil for the March deliveries. How much of the collected $1.860mil should Chester show on the March 31st income statement and how much on the May 31st income statement? Select: 1 $0.614mil in March;
$1.246mil in May $0 in March;
$1.860mil in May $0.930mil in March;
$0.930mil in May $1.860mil in March;
$0 in May

Explanation / Answer

The correct option is

$1.860mil in March;
$0 in May

The company is using accrual method of accounting. Under this method revenues are recorded or recognized when a product is shipped or a service is provided and there is confidence that the buyer will make payment for those goods and service.

Hence the Chaster provided the goods in March month, so all the revenue is recorded in March month..

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