The following information relates to a three-year period for Fulda Corporation, a manufacturer and distributor of satellite phones made to sell for $1,000 each.
2014 Produced 2,000 phones and incurred costs of $600 per phone. Sold 800 phones on account; collected $650,000 in cash from customers.
2015 Sold 600 phones on account; collected cash from customers as follows: on 2014 sales, $150,000; on 2015 sales, $450,000.
2016 Sold the remaining 600 phones for cash; collected the remaining cash due on previous years’ sales.

Calculate the amount of gross profit to be recognized each year under each of the following methods of revenue recognition:
1. Gross profit recognized when production is complete.
2. Gross profit recognized at point of sale.
3. Gross profit recognized using the installment sales method.
4. Gross profit recognized using the cost recovery method.

  • CreatedSeptember 10, 2014
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