ACC706: Accounting Theory & Practice Tutorial 4 Questions 1. Would it be appropriate to recognize revenue at completion of production rather than at the point of sale? 2. If a sale is made F.O.B. Destination, when should the associated revenue be recognized? 3. When organizations sell various goods to customers there is often some uncertainty about the ultimate collectability of the transaction price. a) Explain what is meant by transaction price. b) Should revenue be reduced to take into account the probability that a certain percentage of sales revenue will never be collected? 4. On 1st July 2019, A Ltd sells a caravan to B Ltd. The caravan has a normal sales price of $19,019. Rather than selling the item for its normal sales price, A Ltd sells the caravan for four annual payments of $6,000 per year at an implicit rate of 10%. The first payment to be made on 30th June 2020. The difference between the gross receipts and the current sales price represent interest revenue to be earned by A Ltd over the period of the arrangement. Required: Provide the journal entries for A Ltd for the years ending 30/06/20 and 30/06/2021. 5. Suppose you might have