Review situations (2) and (4) from the case. For each situation, apply the revenue recognition criteria and determine if revenue has been properly recognized.

(2): . Included in net sales and accounts receivable was $8,400 for merchandise ordered by a customer that was packed and in the warehouse. The customer indicated that they might pick it up on January 10, 2020. The customer will pay for the merchandise within 30 days of pick up. The cost of the merchandise was $4,300 and was included in inventory because the merchandise was still in Kamloops’s warehouse.

(4): Due to the promotional campaign, one customer on December 27, 2019, prepaid for groceries in the amount of $1,500. However, Kamloops did not have the inventory in stock but told the customer they will ship the inventory during January 2020 when it arrived in their warehouse. On December 27, Kamloops recorded the cash receipt as a sale.

Answer rating: 100% (QA)

Answer 1 2 The revenue is recognizes appropriately but the inventory ... View the full answer