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Rudik [331]
3 years ago
14

In the Month of March, Digby Corporation received orders of 128 units at a price of $15.00 for their product Daze. Digby uses th

e accrual method of accounting and offers 30 day credit terms. Digby delivers 86 units in March and the balance of 43 units in April. They received payment for 43 units in March, 43 units in April, and 43 units in May. How much revenue is recognized on the March income statement from this order
Business
1 answer:
Montano1993 [528]3 years ago
6 0

Answer:

$1,290

Explanation:

The revenue to be recognized in march is dependent on if the revenue recognition criteria was met in march. These criteria are

  • the cost of goods delivered or service rendered can be measured reliably
  • good/services were delivered/rendered in the month

This is irrespective of whether cash was collected or not under the accrual method.

Given that Digby delivers 86 units in March at a price of $15.00, revenue to be recognized

= 86 * $15

= $1,290

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On January 1, Feld traded a delivery truck and paid $10,000 cash for a tow truck owned by Baker. The delivery truck had an origi
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Asset        140,000

Acc Dep          80,000

Book Value  60,000

Now, becuase there are commercial subtance we will recognize the dgain or loss at disposal.

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bake tow truck                      100,000

cash                                     <u>   (10,000)  </u>

Baker valuation of our truck  90,000

book value                             (60,000)

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<u>journal entry</u>

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    cash                                                   10,000

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   gain on disposal                                30,000

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