Question

In the Month of March, Digby received orders of 110 units at a price of $15.00 for their product Dixie. Digby uses the accrual method of accounting and offers 30 day credit terms. Digby delivers 110 units in April. They received payment for 55 units in March, and 55 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)

Select: 1

a.	0, $825
b.	0, $1,650
c.	$825 , $825
d.	$1,650 , 0

Answer 1

b.0,$1,650.

Revenue on sale of goods is recognised only upon delivery of goods.

In this case goods are not at all delivered in march,so no revenue is to be recognised in march.

The receipt of cash with respect to 55 units in march is not relevant for recognising revenue..

In april since all the 110 units are deivered the revenue on all the 110 units (110*$15)=>$1,650 is to be recognised.

Though only cash with respect to 55 units is received in april, the revenue is to be recognised on all the units delivered.