Question: Telephone Sellers plc sells prepaid telephone cards to customers
Telephone Sellers plc sells prepaid telephone cards to customers. Telephone Sellers then pays the telecommunications company, TeleExpress, for the actual use of its telephone lines. Assume that Telephone Sellers sells £4,000 of prepaid cards in January 2010. It then pays TeleExpress based on usage, which turns out to be 50% in February, 30% in March, and 20% in April. The total payment by Telephone Sellers for TeleExpress lines over the 3 months is £3,000. Indicate how much income Telephone Sellers should recognize in January, February, March, and April.
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