Given only the following information,how much revenue would P Ltd recognise in April 2016? (i)Received a deposit in April from a client for $80 000 for work to be carried out during May.
(ii)Credit sales of $150 000 in April,only $50 000 to be collected in April.
(iii)Collected $20 000 in April from customers for March sales.
(iv)Sold client goods valued at $30 000 on last day of April,will invoice client in early May.
(v)Signed contract to deliver client goods valued at $40 000 in May.
A) $130 000
B) $180 000
C) $200 000
D) $260 000

Question

Quizplus · Accepted Answer

Revenue recognition principles dictate that revenue is recognized when it is earned, regardless of when the payment is received. From the given information: (i) The $80,000 deposit for work in May is not recognized in April as the work has not yet been performed. (ii) Credit sales of $150,000 in April are recognized in April, as the sale occurred in that month. (iii) The $20,000 collected in April for March sales does not affect April's revenue as it was earned in March. (iv) The goods sold on the last day of April for $30,000 should be recognized in April's revenue as the sale occurred in April, despite the invoice being sent in May. (v) The $40,000 contract for delivery in May is not recognized in April as the goods have not yet been delivered. Therefore, the revenue recognized in April is $150,000 (from credit sales) + $30,000 (from goods sold on the last day of April) = $180,000.

Given Only the Following Information,how Much Revenue Would P Ltd