On January 1, 2020, Incredible Tea Inc. agrees to sell 10 boxes of tea per year to
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Question:
On January 1, 2020, Incredible Tea Inc. agrees to sell 10 boxes of tea per year to a buyer for the years 2020, 2021, and 2022. The buyer agrees to pay 2.50 per box of tea. The standalone selling price of tea on January 1, 2020, is 2.50 per box. On January 1, 2021, the buyer orders 5 additional boxes of tea, all to be delivered during 2021. The buyer agrees to pay 2.00 per box for these 5 additional boxes of tea.
If the standalone selling price of tea on January 1, 2021, is 2.50, how much revenue should Incredible Tea recognise for 2021?
Expert Answer:
To determine the revenue that Incredible Tea should recognize for 2021 we need to consider the sal... View the full answer
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