Question

Oriole Company sold toys listed at $369 per unit to Sandhill Co. for $314, a trade discount of 15 percent. Sandhill Co. in turn sells the toys in the market at $331. Oriole should record the receivable and related sales revenue (per unit) at:

1) $369.
2) $292.
3) $331.
4) $314.

Answer 1

Oriole Company should record the receivable and related sales revenue at $314 per unit. Option 4 is correct.

Step-by-step explanation:

Given that Oriole Company sold toys listed at $369 per unit to Sandhill Co. for $314, a trade discount of 15 percent. Sandhill Co. in turn sells the toys in the market at $331.

From given data:

Oriole Company should record the receivable and related sales revenue at $314.

The trade discount of 15 percent means that Sandhill Co. paid 85 percent of the original price of $369.

So, the amount paid by Sandhill Co. is $369 * 0.85 = $313.65,

which can be rounded to $314.

Therefore, Oriole Company should record the receivable and related sales revenue at $314 per unit. Option 4 is correct.