evenues are normally recognized when the company transfers promised goods or ser
ID: 2556903 • Letter: E
Question
evenues are normally recognized when the company transfers promised goods or service he company expects to receive. The amount recorded is the cash-equivalent sales pr ransactions occurred in September: dentifying Revenues Blent sales price. The 'lisin rice. The follow su tions begin in the next fiscal year. Answer from the magazine company's standpoint On September 1 of the current year, a bank lends $1,500 to a company; the note prin (S1,500 x 10 percent) annual interest are due in one year. Answer from the bank's st Fucillo Automotive Group (offering a wide variety of car and truck brands) sells a Ford . A popular ski magazine company receives a total of $12,345 today from subscribers, The point F-150 truck with a list, or "sticker," price of $48,050 for $46,500 cash. d. Macy's department store orders 1,000 men's shirts for $15 each for future delivery from PVH Com manufacturer of IZOD, ARROW, Van Heusen, Calvin Klein, and Tommy Hilfiger apparel. The termo require payment in full within 30 days of delivery. Answer from PVH Corp.'s standpoint. e. PVH Corp. completes production of the shirts described in (d) and delivers the order. Answer from PVH's standpoint. f. PVH Corp. receives payment from Macy's for the events described in (d) and (e). Answer from PVH' g. A customer purchases a ticket from American Airlines for $780 cash to travel the following January. h. Ford Motor Company issues $15 million in new common stock. j. Michigan State plays the first football game referred to in (i). tandpoint Answer from American Airlines's standpoint. Michigan State University receives $19,500,000 cash for 80,000 five-game season footha house. At the signing, Precision receives a check for $200,000 as a deposit on the future construc k. Precision Builders signs a contract with a customer for the construction of a new $1,500,000 ware- Answer from Precision's standpoint. L. A customer orders and receives 10 personal computers from Dell; the customer promises to p m. Sears, a retail store, sells a $300 lamp to a customer who charges the sale on his Sear's credit ca $9,600 within three months. Answer from Dell's standpoint Answer from Sears's standpointExplanation / Answer
The answer to the above questions are as follows:-
a) Revenue will not be recognised in the month of Sep since Ski magazine will provide services in next fiscal year. currently the amount received by ski magazine of .$ 12,345 will be shown as a liability in the books of accounts.
b) The bank will recognize revenue of $ 12.50 for the month of September in the books of Account in Interest Received Account.
c)The company will recognize revenue to the extent of $ 46,500 in sales account. The entry for the same will be as follows:-
Bank A/c Dr 46,500
Discount Allowed Dr 1550
To Sales A/c 48,050
d) No revenue will be recognized as of yet since only order is received.
e) PVH will recognize revenue to the extent of goods sold i.e $ 15,000 in sales account. The entry will be as follows:- Macy's A/c Dr 15,000
To Sales A/c 15,000
f) PVH will make the following entry. Revenue has already been recognised in the earlier point
Bank A/c Dr 15,000
To Macy's A/c 15,000
g) No revenue will be recognised as the service is yet not provided to the customer.
h) No revenue will be recognized as it is a stock issue. The entry will be Bank A/c Dr
To Share Capital A/c
i) No revenue will be recognised
j) Revenue will be recognised to the extent of $ 243.75 in the income account.
k) No revenue will be recognised as the service is not yet given.
l) Currently the company will recognise as a credit sales. The entry will be Debtors A/c Dr $ 9,600
To Sales A/c $9,600
m) Sear will record revenue of $ 300 in the books. The entry will be
Bank A/c Dr $ 300
To Sales A/c $300
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