Question

Part 1 On August 17, 2019, Alpha Limited received an order from Bravo Corp for 6,000 units of its famous Charlene dolls. The selling price is $15 per unit, with terms 2/15, n/30, FOB shipping point. Customers may return the merchandise within 15 days. Based on Alpha Limited’s past experience, product returns average 8% of sales. Customers also normally pay within 15 days to avail of the discount. Each Charlene doll costs Alpha Limited $7 to produce. Alpha Limited ships the dolls on August 28, 2019.

Required:

a) Calculate the amount of revenue to be recognized by Alpha Limited

b) Prepare the journal entries required to record the revenue at the appropriate date

Answer 1