Question

Nash Inc. sells prepaid telephone cards to customers. Nash then pays the telecommunications company, TeleExpress, for the actual use of its telephone lines related to the prepaid telephone cards. Assume that Nash sells $4,000 of prepaid cards in January 2017. It then pays TeleExpress based on usage, which turns out to be 55% in February, 30% in March, and 15% in April. The total payment by Nash for TeleExpress lines over the 3 months is $3,000.

Indicate how much income Nash should recognize in January, February, March, and April. (If answer is 0, please enter 0. Do not leave any fields blank.)



January income$

February income$

March income$

April income$

Answer 1

January $0

February = $550

March = $300

April = $150

Explanation:

Revenues

January $0

February 4000 x 55% = $2200

March 4000 x 30% = $1200

April 4000 x 15% = $600

Expenses

January $0

February 3000 x 55% = $1650

March 3000 x 30% = $900

April 3000 x 15% = $450

Operating Income

January $0

February 2200 - 1,650 = $550

March 1,200 - 900 = $300

April 600- 450 = $150