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In the Month of March, Digby Corporation received orders of 204 units at a price of $15.00 for their product Dixie. Digby uses the accrual method of accounting and offers 30 day credit terms. Digby delivers 136 units in March and the balance of 68 units in April. They received payment for 68 units in March, 68 units in April, and 68 units in May.

a) How much revenue is recognized on the March income statement from this order?
b) How much in the April Income statement? (Answer in thousands)

Respuesta :

Answer:

(a) $2,040

(b) $1,020

Explanation:

(a) Under the accrual method of accounting revenue is recognized in the month when product is delivered,

Revenue is recognized on the March income statement from this order:

= Units Delivers × Unit price

= 136 × $15

= $2,040

(b) Revenue is recognized on the April income statement from this order:

= Units Delivers × Unit price

= 68 × $15

= $1,020

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