Question

Revenues are normally recognized when the delivery of goods or services has occurred, there is persuasive evidence of an arrangement for customer payment, the price is fixed or determinable, and collection is reasonably assured. The amount recorded is the cash-equivalent sales price. The following transactions occurred in September 2016:
a. A popular ski magazine company receives a total of $12,345 today from subscribers. The subscriptions begin in the next fiscal year. Answer from the magazine company’s standpoint.
b. On September 1, 2016, a bank lends $1,500 to a company; the note principal and $150 ($1,500 x 10 percent) annual interest are due in one year. Answer from the bank’s standpoint.
c. Fucillo Hyundai, Inc., sells a truck with a list, or “sticker,” price of $20,050 for $19,500 cash.
d. Macy’s department store orders 1,000 men’s shirts for $15 each for future delivery from Phillips-Van Heusen Corporation, manufacturer of Izod, Arrow, Van Heusen, and Calvin Klein shirts. The terms require payment in full within 30 days of delivery. Answer from Phillips-Van Heusen’s standpoint.
e. Phillips-Van Heusen Corporation completes production of the shirts described in (d) and delivers the order. Answer from Phillips-Van Heusen’s standpoint.
f. Phillips-Van Heusen receives payment from Macy’s for the events described in (d) and (e). Answer from Phillips-Van Heusen’s standpoint.
g. A customer purchases a ticket from American Airlines for $780 cash to travel the following January. Answer from American Airlines’s standpoint.
h. Ford Motor Company issues $15 million in new common stock.
i. Michigan State University receives $19,500,000 cash for 80,000 five-game season football tickets.
j. Michigan State plays the first football game referred to in (i).
k. Precision Builders signs a contract with a customer for the construction of a new $1,500,000 ware-house. At the signing, Precision receives a check for $200,000 as a deposit on the future construction.
Answer from Precision’s standpoint.
l. A customer orders and receives 10 personal computers from Dell; the customer promises to pay $9,600 within three months. Answer from Dell’s standpoint.
m. Sears, a retail store, sells a $300 lamp to a customer who charges the sale on his store credit card. Answer from Sears’s standpoint.

Required:
For each of the transactions, if revenue is to be recognized in September, indicate the revenue account title and amount. If revenue is not to be recognized in September, explain why.



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  • CreatedJuly 01, 2014
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