Q1. On December 1, Year 1 RETAIL STORE sells a $1,500 computer. Customer Nancy pays $500 in cash and signs an installment agreement for the remaining $1,000 to be paid the following year, Year 2.
On the income statement of RETAIL STORE, how much revenue should be recognized?
a. Year 1
b. Year 2
Q2. In this accounting period, CYCLES GALORE purchased 10 bicycles for $200 each at wholesale and sold 6 bicycles for $500 each to customers. On the income statement of CYCLES GALORE, how much will be reported for:
a. Sales revenue?
b. Cost of goods sold?
c. Gross profit?
d. The cost of the four unsold bicycles will remain part of (_____________ / COGS / retained earnings) reported on the (_________ / IS / RE / CF). What amount will be reported? ________
Q3. Kiger Kayaking, a sporting goods retailer, began operations on August 1 with the following transactions during the first month of operation. Compute August net income (using accrual-based accounting) and the August 31 cash balance.