In the Month of March, Chester received orders of 117 units at a price of $15.00
ID: 2578374 • Letter: I
Question
In the Month of March, Chester received orders of 117 units at a price of $15.00 for their product Cat. Chester uses the accrual method of accounting and offers 30 day credit terms. Chester delivers 117 units in April. They received payment for 59 units in March, and 59 units in April. In the March income statement, how much revenue is recognized on the March income statement from this order? How much in the April Income statement? (Answer in thousands) Select: 1 0, $878 $878 , $878 $1,755 , 0 0, $1,755 In the Month of March, Chester received orders of 117 units at a price of $15.00 for their product Cat. Chester uses the accrual method of accounting and offers 30 day credit terms. Chester delivers 117 units in April. They received payment for 59 units in March, and 59 units in April. In the March income statement, how much revenue is recognized on the March income statement from this order? How much in the April Income statement? (Answer in thousands) Select: 1 0, $878 $878 , $878 $1,755 , 0 0, $1,755Explanation / Answer
Chester has delivered the goods in the month of April, that means the risks and rewards in the goods are transferred to the buyer in April, so revenue should be recognised for all units in the month of April. The advance receipt of Cash does not affect the revenue recognition for a person using accrual accounting.
In the month of March, the receipt is credited to unearned revenue account and revenue on the same is recognised, once the sale is complete.
In the March income statement, $0 revenue is recognized on the March income statement from this order. $1,755(117*15) revenue is recognised in the April Income statement.
Answer - 0, $1,755