A local pharmacy company has been in business for many years. Recently the company got into...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A local pharmacy company has been in business for many years. Recently the company got into some trouble because investors wanted to know why the profits were trending downward. So the management of this company decided they were going to change a few things. The management has decided that the new policy for recognizing revenues for the pharmacy businesses will be when the customer drops off the prescription. The controller, William asked about what if the customer does not pick up their prescription. The management stated that we don't get a lot of people that don't pick up their prescriptions. Management states this will recognize our revenue quicker and hopefully this will increase our cash flow. We must keep our investors happy. William, the controller has come to you as an outside CPA to research this change in revenue recognition. 1. Please explain the 5-step revenue recognition policy that is now GAAP. 2. Demonstrate how this follows this revenue recognition rule. 3. Please provide journal entries in your example. 4. Will this change in revenue recognition help increase cash flow? A local pharmacy company has been in business for many years. Recently the company got into some trouble because investors wanted to know why the profits were trending downward. So the management of this company decided they were going to change a few things. The management has decided that the new policy for recognizing revenues for the pharmacy businesses will be when the customer drops off the prescription. The controller, William asked about what if the customer does not pick up their prescription. The management stated that we don't get a lot of people that don't pick up their prescriptions. Management states this will recognize our revenue quicker and hopefully this will increase our cash flow. We must keep our investors happy. William, the controller has come to you as an outside CPA to research this change in revenue recognition. 1. Please explain the 5-step revenue recognition policy that is now GAAP. 2. Demonstrate how this follows this revenue recognition rule. 3. Please provide journal entries in your example. 4. Will this change in revenue recognition help increase cash flow?
Expert Answer:
Answer rating: 100% (QA)
1 The Generally Accepted Accounting Principles GAAP provide a 5step revenue recognition policy a Identify the Contract with the Customer Determine whe... View the full answer
Related Book For
Managing Business Ethics Making Ethical Decisions
ISBN: 9781506388595
1st Edition
Authors: Alfred A. Marcus, Timothy J. Hargrave
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Staircase Equipment Company uses a job order cost system. The following data summarize the operations related to production for April 2014, the first month of operations: Materials purchased on...
-
What is the difference between a lossless format and a lossy format for storing digital images? For what type of images might one or the other be preferable?
-
Find experimentally how much MLEs can differ depending on the sample size. Generate many samples of the same size n, e.g., of the standardized normal distribution, and record x and s 2 . Then...
-
Danielle Altman, the chief economist at Instawork, wrote an opinion column in the Wall Street Journal in which he described frictional unemployment as joblessness during the job-search process . . ....
-
After graduating from college with your MBA, you decide to take your grandma's secret cinnamon roll recipe and open up a bakery. You grew up devouring your grandma's rolls, and you have convinced her...
-
10. A skier plans to ski a smooth fixed hemisphere of radius R. He starts form rest on a curved smooth surface of height TR/4 The angle at which he leaves the hemisphere is : (a) cos Yshipma (b) cos...
-
Effective January 1, 1970, Chrysler Corporation adopted the FIFO method for inventories previously valued by the LIFO method. The 1970 annual report stated, This . makes the financial statements with...
-
T.P. has been experiencing weight loss, rapid heart rate, irritability, hand tremors, and difficulty sleeping.Physical exam showed slight enlargement of the thyroid.Her physician suspects a defect in...
-
6 2 Solve for x and check your answer: your answer: 4+- x-5x-5
-
Yield to maturity The bond shown in the following table pays interest annually. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Par value $500...
-
Financial analysis ratios can NOT be used to compare a company's operations from period to period compare the company's operations to the operations of industry leaders. facilitate better decision...
-
write a comprehensive Communication. You must submit your work essay related to Strategic . The topic is, "Do you think all companies should invest in varieties of communication programs and recruit...
-
2. On December 31, 2020, the total assets of Allen, Inc. were $91,000, and liabilities were $48,000. Allen, Inc. began business January 1, 2016, and had an average net income of $16,000 per year....
-
Calculate the mean: $990, $95.38, $60.70, $608.83. (Round your answer to the nearest hundredth.)
-
Which of the following gives the range of y = 4 - 2 -x ? (A) (- , ) (B) (- , 4) (C) [- 4, ) (D) (- , 4] (E) All reals
-
USMNC has just purchased Latin America Metallurgy Company (LAMC) from a competitor. LAMC is located near Managua, Nicaragua. There has been rapid growth in worldwide demand for the sheet metal and...
-
Pithos Internet Company is known for its innovative software products. The secret to Pithoss success is in large part its ability to create a climate in which its smart and ambitious employees are...
-
Dearborn and Dyehardt (D&D) has just put Forzosein on the market, a new compound that may be able to save the lives of people who suffer from cancer. D&D charges hundreds of times what it cost the...
-
An object traveling at a constant velocity vo experiences a constant acceleration in the same direction for a period of time t. Then an acceleration of equal magnitude is experienced in the opposite...
-
You are told that a person has walked 750 m. What can you safely say about the persons final position relative to the starting point?
-
If the displacement of an object is 300 m north, what can you say about the distance traveled by the object?
Study smarter with the SolutionInn App