In the Month of March, Digby Corporation received orders of 173 units at a price
ID: 2585135 • Letter: I
Question
In the Month of March, Digby Corporation received orders of 173 units at a price of $15.00 for their product Dixie. Digby uses the accrual method of accounting and offers 30 day credit terms. Digby delivers 116 units in March and the balance of 58 units in April. They received payment for 58 units in March, 58 units in April, and 58 units in May. 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 $870 , $870 0 , $2,595 $1,740 , $870 $2,595 , 0 In the Month of March, Digby Corporation received orders of 173 units at a price of $15.00 for their product Dixie. Digby uses the accrual method of accounting and offers 30 day credit terms. Digby delivers 116 units in March and the balance of 58 units in April. They received payment for 58 units in March, 58 units in April, and 58 units in May. 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 $870 , $870 0 , $2,595 $1,740 , $870 $2,595 , 0Explanation / Answer
The method under which revenues are recognized on the income statement when they are earned and not when cash is received is accrual accounting method. So in this case Digby Corporation has delivered 116 units in March and balance 58 units in April.
Therefore revenue recognized on the March income statement is $ 1,740 and in the April income statement is $ 870.