Revenue recognition principle Revenue recognition principle states that every business organization should recognize the revenue when it is earned, no matter, cash related to that obligation is received or not. SC Magazine sells subscriptions for $36 for 18 issues and collects the cash in advance, and then it would deliver the magazines to the subscribers each month through mail. When SC Magazine should record revenue for this situation, by applying revenue recognition principle.

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Chapter 3, Problem 3.3SE

(a)

To determine

Revenue recognition principle

Revenue recognition principle states that every business organization should recognize the revenue when it is earned, no matter, cash related to that obligation is received or not.

SC Magazine sells subscriptions for $36 for 18 issues and collects the cash in advance, and then it would deliver the magazines to the subscribers each month through mail.

When SC Magazine should record revenue for this situation, by applying revenue recognition principle.

(b)

To determine

The amount of revenue, SC Magazine should record for 8 issues, by applying revenue recognition principle.

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Question 1. Pearl Leasing Company agrees to lease equipment to Martinez Corporation on January 1, 2025. The following information relates to the lease agreement. 1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years. 2 The cost of the machinery is $541,000, and the fair value of the asset on January 1, 2025, is $760,000. 3. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $45,000, Martinez estimates that the expected residual value at the end of the lease term will be $45,000. Martinez amortizes all of its leased equipment on a straight-line basis. 4. The lease agreement requires equal annual rental payments, beginning on January 1, 2025. 5. The collectibility of the lease payments is probable. 6. Pearl desires a 10% rate of return on its investments. Martinez's incremental borrowing rate is 11%, and the lessor's implicit rate is unknown. Annual rental payment is…