Answered: recognize revenue

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On 30^th of September 2020, Bobby delivered the October edition of a newspaper (with a total store value of $100,000) to a book shop. Legal title remains with Bobby until the bookstore sells a newspaper to the last consumer. The bookstores will start selling the newspaper to its customer on the 1^st of October 2020. Any newspaper that remains unsold by the bookstore on the 31^st of October 2020 are returned to Bobby. The bookstore will be invoiced by Bobby in November 2020 based on the difference between the number of issues they received and the number they return.

Required

Should Bobby recognize revenue from the above transaction in the year ended 30^th of September 2020?

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