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On October 20, 2005, Grimm Co. consigned 40 freezers to Holden Co. for sale at $1,000 each and paid $800 in transportation costs. On December 30, 2005, Holden reported the sale of 10 freezers and remitted $8,500. The remittance was net of the agreed 15% commission. What amount should Grimm recognize as consignment sales revenue for 2005?

User Hesolar
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1 Answer

7 votes

Answer:

Grimm Co.'s revenue from consignment sales is $10,000

Step-by-step explanation:

Grimm Co. must recognize the total sales revenue generated from their consignment sales = 10 freezers x $1,000 per freezer = $10,000.

Transportation costs and sales commissions are operational costs that lower profit but they don't affect total revenue.

User Dejay
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