During its first year, the company spent approximately $$390,000$ to catch $600$ crocodiles. Of these, $400$ crocodiles were sold and shipped to customers at a selling price of $$1,250$ per crocodile. Shipping costs of $$100$ per crocodile were paid for during the year. Customers were given liberal credit terms and only

$$300,000$ from an equivalent $300$ customers was collected during the first year. Ms$.$ Amara estimated that as much as $20\%$ of the sales price will be spent on collection costs and bad debts expenses.

a$.$ Prepare three income statements for the year assuming that revenue is to be recognized

when:

$1.$ Crocodiles have been caught $($i$.$e$.$ production complete$).$

$2.$ Crocodiles have been sold and delivered

$3.$ Cash collections are complete

b$.$ What income would you report for $2008?$ Why? Support your answer with reference to appropriate FASB's rules.

Answer rating: 100% (QA)

a Income Statements for the Year Revenue Recognized When Crocodiles Have Been Caught ie Production C... View the full answer