Question

In the Month of March, Chester Corporation received orders of 156 units at a price of $15.00 for their product Cozy. Chester uses the accrual method of accounting and offers 30 day credit terms. Chester delivers 104 units in March and the balance of 52 units in April. They received payment for 52 units in March, 52 units in April, and 52 units in May. How much revenue is recognized on the March income statement from this order? How much in the April Income statement? (Answer in thousands)

a. $780 , $780
b. $1,560 , $780
c. $2,340 , 0
d. 0 , $2,340

Answer 1

b. $1,560 , $780

Step-by-step explanation:

Step 1. Given information.

• Chester Corporation received orders of 156 units at a price of $15.00 for their product Cozy. Which means $2.340 income.
• 104 units for march and remaining 52 in April.
• The payment is received in three periods: 52 march, 52 april and 52 May

Step 2. Formulas needed to solve the exercise.

Income in march = Units payed * price per unit

Income in April = Units payed * price per unit

Step 3. Calculation and step 4. Solution.

Income in march = 104 * 14 = $1560

Income in April= 52 * 15 = $780

Note: because receiving order does not mean the sale is done. the 52 unit is dispatched in april, so we will take sales for april as 52 x 15.