Question

In the month of march, baldwin received orders of 173 units at a price of $15.00 for their product bead, and in april receives an order for 43 units of their product bead at $15.00. baldwin uses the accrual method of accounting and offers 30 day credit terms. baldwin delivers 0 units in march, 173 units in april and 43 units in may. they received payment for 173 units in april, and payment for 43 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) select : 1 save answer

O $2,595 , $649
O $1,081 , $1,081
O $3,244 , 0
O 0, $2,595

Answer 1

No revenue is recognized in March because no units were delivered. In April, revenue of $2,595,000 is recognized since 173 units were delivered. Therefore correct option is D

Step-by-step explanation:

Under the accrual method of accounting, revenue is recognized when it is earned regardless of when the payment is received. In March, no units were delivered, hence, no revenue should be recognized on the March income statement. In April, Baldwin delivers 173 units, so they will recognize the revenue for these units. The revenue recognized would be 173 units x $15/unit = $2595 (in thousands).

On the March income statement, the revenue recognized will be $0. On the April income statement, the revenue recognized will be $2,595 (in thousands).