Question

Tessa ordered a refrigerator online from Lowes on November 20 and charged the purchase to her Lowes credit card so that she received a 5% discount. The refrigerator was back-ordered so was not delivered and installed until December 23 . The charge was included on Tessa's December Lowes credit card statement which she paid in full on January 7. The 90-day warranty of the refrigerator expired on March 20. Lowes should recognize revenue from the sale of December 23. November 20. March 20. January 7.

Answer 1

The correct answer is December 23. This is the date when the refrigerator was delivered and installed, and Lowes should recognize the revenue from the sale.

Step-by-step explanation:

Lowes should recognize revenue from the sale of the refrigerator on December 23. Here's the step-by-step explanation:

1. Tessa ordered the refrigerator online from Lowes on November 20.

2. The purchase was charged to her Lowes credit card, and she received a 5% discount.

3. The refrigerator was back-ordered, so it was not delivered and installed until December 23.

4. The charge for the refrigerator was included on Tessa's December Lowes credit card statement.

5. Tessa paid her credit card statement in full on January 7.

6. The 90-day warranty of the refrigerator expired on March 20.

According to the revenue recognition principle, revenue should be recognized when the product or service is delivered or when the company's performance obligation is satisfied. In this case, the refrigerator was delivered and installed on December 23, which is when Lowes should recognize the revenue from the sale.