The cases given below for 20X5 are independent of each other. In each instance, assume that the accounting period ends 31 December.
Case A On 31 December 20X5, Zulu Sales Company sold a machine for $ 100,000 and collected $ 30,000 cash. The remainder plus 10% interest is payable 31 December 20X6. Zulu will deliver the machine on 5 January 20X6. The buyer has an excellent credit rating.
Case B On 17 April 20X5, the law firm of Pearlstein and Wolf received $ 30,000 from a client. he payment was a retainer for legal services to be provided, as needed, from 1 May 20X5 though 30 April 20X6. During 20X5, additional work was provided to the client and billed accordingly.
Case C On 15 November 20X5, Victor Cement Company sold a tonne of its product for $ 500. The cement was delivered on that date. Victor agreed that the buyer could pay for the product with three units of its own merchandise commonly sold for $ 200 each. The buyer promised to deliver the merchandise around 31 January 20X6.
Case D On 2 August 20X5, Remer Publishing Company collected $ 720 cash for a three-year subscription to a monthly magazine, Investor’s Stock and Bond Advisory. The First issue will be mailed to subscribers in December 20X5.

Write a brief report covering the following for each of the four situations:
1.When revenue should be recognized.
2. Any entry that should be made on the transaction date.
3. An explanation of the reasoning for your responses to requirements (1) and (2).

  • CreatedFebruary 17, 2015
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