Question

In the Month of March, Chester received orders of 195 units at a price of $15.00 for their product Creak, and in April receives an order for 49 units of their product Creak at $15.00. Chester uses the accrual method of accounting and offers 30 day credit terms. Chester delivers 0 units in March, 195 units in April and 49 units in May. They received payment for 195 units in April, and payment for 49 units in May. How much revenue is recognized on the March income statement from this order

Answer 1

Answer:

Chester

The revenue that is recognized on the March income statement from this order is:

= $0.

Explanation:

a) Data and Calculations:

Selling price of Creak = $15 per unit

                                 March     April        May        Total

Orders received        195           49                         244

Orders delivered          0          195          49          244

Sales revenue            $0    $2,925     $735     $3,660

Cash receipt                       $2,925     $735     $3,660

Revenue recognized $0    $2,925     $735     $3,660

b) Revenue is to be recognized when performance obligations have been fulfilled according to the new Revenue standard IFRS 15 or GAAP ASC 606, as may be applicable.