In the month of March the Digby Corporation received and delivered orders of 176

Question

In the month of March the Digby Corporation received and delivered orders of 176,000 units at a price of $15.00 for revenue of $2.640mil for their product Dome. Digby uses the accrual method of accounting and offers 30 day credit terms. By the end of May Digby had collected payments of $2.640mil for the March deliveries. How much of the collected $2.640mil should Digby show on the March 31st income statement and how much on the May 31st income statement? Select: 1 $1.320mil in March; $1.320mil in May $2.640mil in March; $0 in May $0 in March; $2.640mil in May $0.871mil in March; $1.769mil in May

Explanation / Answer

Under accrual method of accounting, revenues are recorded in income statement when earned. Thus, Digby Corporation will record revenue of $2.640 mil on March end, although it has collected the amount on the end of May.

Correct option:

$2.640 mil in March; $0 in May

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

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