HappySong has created a new business model. If someone is unhappy, they can go online to HappySong.com, which will connect the person to a live feed with a band that will listen to why the person is unhappy, and then play them a live song to make them happy again. The service costs $20, and the band gets $18. The customer does not interact with HappySong other than to enter payment information on the website; they are immediately routed to a band. Many bands are affiliated with HappySong but are not employees of the firm. The band always gets paid $18, whether HappySong is successful at collecting the $20 or not. How should HappySong account for the $20 they collect from customers and the $18 they send to the bands?

Answer rating: 100% (QA)

Happy Song should record the 20 as revenue and the 18 as a cost of goods sold This is because the 20 ... View the full answer