Question

In the month of march the digby corporation received and delivered orders of 203,000 units at a price of $15.00 for revenue of $3.045mil for their product don. digby uses the accrual method of accounting and offers 30 day credit terms. by the end of may digby had collected payments of $3.045mil for the march deliveries. how much of the collected $3.045mil should digby show on the march 31st income statement and how much on the may 31st income statement?

Answer 1

Digby Corporation should show part of the collected $3.045 million on the March 31st income statement and the rest on the May 31st income statement.

Step-by-step explanation:

Digby Corporation should show part of the collected $3.045 million on the March 31st income statement and the rest on the May 31st income statement.

To determine how much to show on each income statement, we need to calculate how much of the revenue from the 203,000 units delivered in March was collected by the end of May. Since Digby offers 30-day credit terms, all payments received by the end of April can be attributed to the March deliveries. Therefore, the revenue collected by the end of April is $3.045 million.

Thus, Digby should show $3.045 million on the March 31st income statement and $0 on the May 31st income statement, as all revenue from the March deliveries was collected by the end of April.