Question

Assume Royal Palm Corp., an equipment distributor, sells a piece of machinery with a list price of $800,000 to Arch Inc. Arch Inc. will pay $850,000 in one year.

Royal Palm Corp. normally sells this type of equipment for 90% of list price.

How much should be recorded as revenue?
a. $720,000.b. $765,000.c. $800,000.d. $850,000.

Answer 1

a. $720,000

Step-by-step explanation:

Since in the question, it is given that the equipment is sold at the list price

The list price is $800,000 and the selling percentage is 90%

So, the revenue should be recorded

= List price × selling percentage

= $800,000 × 90%

= $720,000

Simply we multiplied the list with the selling percentage so that the correct amount can come