State the amount of revenue that should be recognised by Whitehall Ltd in the year ended 31

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State the amount of revenue that should be recognised by Whitehall Ltd in the year ended 31 December 2017 for each item below, justifying your answer by reference to the revenue definition and recognition criteria in IAS 18/AASB 118. Prepare any journal entries where necessary:

(a) Whitehall Ltd’s net credit sales for 2017 were $400 000, 75% of which were collected in 2017. Past experience indicates that about 96% of all credit sales are eventually collected.

(b) Whitehall Ltd received $100 000 cash from a customer in December 2017 as payment for special-purpose machinery which is to be manufactured and shipped to the customer in February 2018.

(c) Whitehall Ltd started renting out its excess warehouse space on 1 October 2017, on which date it received $12 000 cash from the tenant for 6 months rent in advance. Ignore GST.

(d) Whitehall Ltd received 10 000 shares in Mitcham Ltd on 20 December 2017, on which date the shares were trading at $4.50 per share, as a gift from a grateful client.

(e) Whitehall Ltd received an item of equipment as settlement for goods sold on credit for $3000. On the date of the sale, the equipment had a fair value of $3200 and a carrying amount in the customer’s records of $2200. Prepare also the journal entry to record the receipt of the equipment. Ignore GST.

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Accounting

ISBN: 978-1118608227

9th edition

Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett

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