Question

On July 10, Boogie Footware agrees to a contract to sell 800 pair of flapper shoes for $16,000 to Twenties, Inc. On September 1, after 500 pair of have been delivered, Boogie and Twenties modify the agreement to reduce the price of the remaining 300 pair of flapper shoes to $10 a pair. During September, Boogie delivers 200 pairs of shoes. How much revenue will Boogie recognize for the month of September?

Answer 1

Answer:

$2,000

Explanation:

Revenue is the income generated from normal business activities. This includes allowances, discounts and deductions for sales returned.

Since Boogie and Twenties modify the agreement to reduce the price of the remaining 300 pair of flapper shoes to $10 a pair, it means that revenue to be recognized from the date of the change will be recognized at a unit price of $10.

As such if Boogie delivers 200 pairs of shoes in September,

Revenue to be recognized in the Month of September

= 200 * $10

= $2,000