Chapter 3, Problem 3.3E

Refer to the situations discussed in E3–1.

Required:

For each situation, determine the date for which the company recognizes revenue using cash-basis accounting.

E3–1 Consider the following situations:

  1.    American Airlines collects cash on June 12 from the sale of a ticket to a customer. The flight occurs on August 16.

  2.    A customer purchases sunglasses from Eddie Bauer on January 27 on account. Eddie Bauer receives payment from the customer on February 2.

  3.    On March 30, a customer preorders 10 supreme pizzas (without onions) from Pizza Hut for a birthday party. The pizzas are prepared and delivered on April 2. The company receives cash at the time of delivery.

  4.    A customer pays in advance for a three-month subscription to Sports Illustrated on July 1. Issues are scheduled for delivery each week from July 1 through September 30.

Required:

For each situation, determine the date for which the company recognizes the revenue under accrual-basis accounting.