In the month of March the Digby Corporation received and delivered orders of 149

Question

In the month of March the Digby Corporation received and delivered orders of 149,000 units at a price of $15.00 for revenue of $2.235mil 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 $2.235mil for the March deliveries. How much of the collected $2.235mil should Digby show on the March 31st income statement and how much on the May 31st income statement? A $2.235mil in March;
$0 in May B $1.117mil in March;
$1.117mil in May C $0 in March;
$2.235mil in May D $0.738mil in March;
$1.497mil in May In the month of March the Digby Corporation received and delivered orders of 149,000 units at a price of $15.00 for revenue of $2.235mil 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 $2.235mil for the March deliveries. How much of the collected $2.235mil should Digby show on the March 31st income statement and how much on the May 31st income statement? A $2.235mil in March;
$0 in May B $1.117mil in March;
$1.117mil in May C $0 in March;
$2.235mil in May D $0.738mil in March;
$1.497mil in May

Explanation / Answer

Answer . A $2.235mil in March; $0 in May

Explanation : Under accrual method of accounting the sales are to record in income statement as & when they occour .The timing of collection of sales made priviously shall have no impact in income statement . Therefore income statement of March shal include the sales made in march ie $2.235mil & no part of this sales shall reflect in the income statement of May .

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