Aria Perfume, Inc., sold 3,120 boxes of white musk soap during January of 2018 a

Question

Aria Perfume, Inc., sold 3,120 boxes of white musk soap during January of 2018 at the price of $50 per box. The company offers a full refund to unsatisfied customers for any product returned within 30 days from the date of purchase. Based on historical experience, Aria expects that 4% of sales will be returned. How many performance obligations are there in each sale of a box of soap? How much revenue should Aria recognize in January? Number of performance obligations in the contract January revenue

Explanation / Answer

Number of performance obligations in the contract = 1 (Right of return ain't a performance obligation)

January Revenue = 149,760

Calculation :-

Amount to be recognized = (3120 boxes - 4% returns) x 50

=$149,760

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