Question

Apple had sales of $200,000 for the year ended 12/04 that included the following items: -A...

Apple had sales of $200,000 for the year ended 12/04 that included the following items:

-A cash receipt of $12,000 for a promotional project for the last two weeks of December and the first week of January

-Accounts receivable of $10,000 for work performed in November, but the payment was not received yet.

Referring to the above and using the accrual basis of accounting, what should Apple, record as sales for the year ending 12/04?

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Answer #1

Answer:

$196,000

Explanation:

a.

Total cash receipts = $12,000

Given, it was for a project for the last two weeks of December and the first week of January.

:. Revenue for December ( current year ) = $12,000* 2/3

= $8,000.

Therefore, revenue of next year to be exclued as per accrual basis = $4000.

b.

Accounts receivable$10,000 is for the work done in November. It isn't received but the work is done. As per accrual basis , it should be included.

Therefore , as per accrual basis Apple should record it's sale for the year ending 12/04 $196,000. [ $200,000 - $4000 ]  

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