Problem 2: For each of the following transactions, indicate if revenues should b

Question

Problem 2: For each of the following transactions, indicate if revenues should be recognized in September. If revenue should not be recognized in September, explain why.

A) On September 12, Walmart sells a $95 bookcase to a student who charges the sale on

his credit card. The student pays the credit card balance in full in October. Should

revenue be recorded in September by Walmart?

B) Microsoft issues $300 million in new common stock on September 15. Should

revenue be recorded in September? Answer from Microsoft’s’ point of view.

C) On September 20, a customer purchases an airline ticket from Delta Airlines for

$1,700 for travel to Brazil next January. Should revenue be recorded in September?

Answer from Delta Airlines’ point of view.

D) On September 25, a customer orders and receives 3 personal computers from Dell

Company on account. The customer promises to pay Dell $6,000 in two months.

Should revenue be recorded in September by Dell?

Explanation / Answer

A)Yes we should recognize since sale is happened on september itself but we can collect cash for the sale in any month after september

b)No, we should not as there is no sales

c)No we should not recognize as it is unearned revenue

d)Yes , we should as sale is happened in september only.

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