Question

In the Month of March, Digby received orders of 164 units at a price of $15.00 for their product Don, and in April receives an order for 41 units of their product Don at $15.00. Digby uses the accrual method of accounting and offers 30 day credit terms. Digby delivers 0 units in March, 164 units in April and 41 units in May. They received payment for 164 units in April, and payment for 41 units in May. How much revenue is recognized on the March income statement from this order

Answer 1

Answer:

Sales for March, 164 * 15 = $2,460

Explanation:

According to the accrual system, the purchases and sales are recorded when they occur. When compared to the cash basis, they are only recorded when actual cash is received or paid for them.

For March the transaction of 164 units has occurred and thus this sale will be recorded.

Sales for March, 164 * 15 = $2,460

This is the revenue recorded for March under accruals, for cash this would have been 0.

Hope that helps.