Question

For each of the following transactions, determine if Raymond Corporation has earned revenue during the month of May and, if so, how much has been earned.Customer A paid Raymond $1,500 for work Raymond will perform in June.Customer B purchased $6,000 in inventory with the total payment expected to be received in four weeks. Those items had cost Raymond $3,600 in February.Raymond performed a service for Customer C and was paid $3,400 in cash.Customer D paid Raymond $2,300 for inventory that was purchased previously in April.

Answer 1

Answer:In the month of May, Revenue was only earned from Customer C $3,400 and customer D, $2,300. Revenue was not earned from Customers A and B in the month of May. Therefore, total revenue is $5,700.

Explanation:In accordance with the principle of revenue recognition,Revenue will only be recognised when it is earned and services when they are fully rendered. For Customer A, the service has not been rendered, Therefore, the revenue is not yet earned.

For customer B, Although agreement has been reached and goods delivered, since payment hasn't been received, revenue is not recognised.