Determine the effects of the following events on the financial statements of Glo

Question

Determine the effects of the following events on the financial statements of Global Solutions:

Global Solutions sells calendars from their website. This year they got a contract from World Supplier. The calendars hold no value if returned. A total of 400,000 calendars were shipped to World Supplier in July. World Supplier will have to pay $3 per calendar if all calendars are sold. $3.5 per calendar if more than 200,000 are sold but less than 400,000.Or $4 per calendar if less than 20,000 are sold.

Historically 70% of its stock is sold. But they believe the extra traffic will result in more sales. The calendars have a retail value of $6.99.

Explanation / Answer

Answer : Calander Shipped = 400000

Possibility of sale = 400000*70%

= 280000

Sale value for Global Solution = 280000*3.50

= $ 980000

Therefore, Global Solution will be book sale of calander approx $ 980000 and cash or account receivable increase by $ 980000.

Global solution revenue increase approx $ 980000 and assets (cash or account receivable ) increase approx $ 980000.

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