decided to sell a combination of the t-shirt for $10 with a free hotdog. Donovan buys the combination of the t-shirt and the hotdog for $10 in cash. How should Franiuk account for the transaction?
decided to sell a combination of the t-shirt for $10 with a free hotdog. Donovan buys the combination of the t-shirt and the hotdog for $10 in cash. How should Franiuk account for the transaction?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Franiuk Hotdogs and Grill normally sells hotdogs for $2.00 but also t-shirts with the name of the business and
its logo prominently displayed for $10. The t-shirts haven't been selling that well lately, so Franiuk has
decided to sell a combination of the t-shirt for $10 with a free hotdog. Donovan buys the combination of the
t-shirt and the hotdog for $10 in cash. How should Franiuk account for the transaction?
O Franiuk should recognize $10 revenue, comprised of $10 for the t-shirt, $2 for the hotdog, and $2 as a liability.
Franiuk should recognize $12 revenue, comprised of $10 for the t-shirt, $2 for the hotdog, and $2 for discount expense.
O Franiuk should recognize $10 revenue, comprised of $8.33 for the t-shirt, $1.67 for the hotdog.
O Franiuk should recognize $10 revenue, comprised of $10 for the t-shirt, $0 for the hotdog.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F98f2cd1f-a250-443f-8f47-8dc5c467026b%2F8e303ff7-7b53-4534-bfee-a54a8004f9a8%2Fs89y59g_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Franiuk Hotdogs and Grill normally sells hotdogs for $2.00 but also t-shirts with the name of the business and
its logo prominently displayed for $10. The t-shirts haven't been selling that well lately, so Franiuk has
decided to sell a combination of the t-shirt for $10 with a free hotdog. Donovan buys the combination of the
t-shirt and the hotdog for $10 in cash. How should Franiuk account for the transaction?
O Franiuk should recognize $10 revenue, comprised of $10 for the t-shirt, $2 for the hotdog, and $2 as a liability.
Franiuk should recognize $12 revenue, comprised of $10 for the t-shirt, $2 for the hotdog, and $2 for discount expense.
O Franiuk should recognize $10 revenue, comprised of $8.33 for the t-shirt, $1.67 for the hotdog.
O Franiuk should recognize $10 revenue, comprised of $10 for the t-shirt, $0 for the hotdog.
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