Xanetics, Inc., recently received a $150,000 special order from Lartech, Inc., f

Question

Xanetics, Inc., recently received a $150,000 special order from Lartech, Inc., for some customized equipment. A 50 percent deposit accompanied the order, with the remaining $75,000 payment to be made at delivery. Xanetics manufactured the equipment and was ready to ship it to Lartech when it was notified that Lartech had declared bankruptcy. Required: Identify the accounting issues related to the above scenario. Has Xanetics earned a revenue? Has it been realized? Should the company recognize any revenue?

Explanation / Answer

The company had received an amount of $75000 as advance.NO amount of sale was recorded as the ownership of goods was not transferred and sale was not completed. The company has not earned revenue as the buyer has become bankrupt and would not be completing the sale.The company should not recognize revenue.

Related Questions

Navigate

• Browse (All)
• Browse X
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.