In the Month of March, Chester received orders of 124 units at a price of $15.00 for their product Cat. Chester uses the accrual method of accounting and offers 30 day credit terms. Chester delivers 124 units in April. They received payment for 62 units in March, and 62 units in April. In the March income statement, how much revenue is recognized on the March income statement from this order? How much in the April Income statement? (Answer in thousands)

Question

Kyson Houston

Business

2 April, 14:06

In the Month of March, Chester received orders of 124 units at a price of $15.00 for their product Cat. Chester uses the accrual method of accounting and offers 30 day credit terms. Chester delivers 124 units in April. They received payment for 62 units in March, and 62 units in April. In the March income statement, how much revenue is recognized on the March income statement from this order? How much in the April Income statement? (Answer in thousands)

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Answers (1)

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Phoebe Jacobs · Answer 1

Sales revenue in March is $0

Sales revenue in April is $1,860

Explanation:

Accrual method of accounting stipulated that revenue is earned when the seller has performed under the sales contract. By performance I mean the seller has delivered the promised goods to the buyer.

Judging from this, Chester did not deliver the product Cat until April, even though half of the payment was received in March, the sales amount for the month of March is $0, while the entire sales figure of $1,860 ($15*124) would be recognized in the income statement of April.