Question: The cases given below for 20X5 are independent of each

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.

Required:
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).


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  • CreatedFebruary 17, 2015
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