On October 2, a book retailer decides to place an order for five hundred books at ($100)
Question:
On October 2, a book retailer decides to place an order for five hundred books at \($100\) each from a supplier for the purpose of resale to its customers. On October 5, the retailer actually orders the books. The order is still fully cancelable. On October 20, the retailer receives the five hundred books from the supplier. Although the contract requires the payment be made thirty days after delivery, ownership of the books passes to the retailer when she takes delivery of the books. The retailer pays the supplier \($50,000\) on November 20.
When should the retailer recognize a \($50,000\) liability to her supplier?
a. On October 2
b. On October 5
c. On October 20
d. On November 20
Step by Step Answer:
Practical Finance For Operations And Supply Chain Management
ISBN: 9780262043595
1st Edition
Authors: Alejandro Serrano, Spyros D. Lekkakos, James B. Rice