On January 27, 2018, Lock Company Entered into a Three-Year

question 46

Essay

On January 27, 2018, Lock Company entered into a three-year agreement with Strong Enterprises to supply 2,000 ounces of platinum for $200 an ounce. During 2018, Lock mined and purified the 2,000 ounces of platinum at a cost of $200,000. The platinum was shipped on January 14, 2019 and arrived on January 15, 2019, at Strong's warehouse. What is Lock's revenue and gross profit recognized during 2018, consistent with the criteria for revenue recognition and the matching concept? Explain.

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Definitions:

Existing Family Company

A business that is owned and operated by members of the same family, often passed down through generations.

Entrepreneurial Activity

Initiatives taken by individuals to create, organize, and manage a business venture to make profit, often in the face of risk.

Strategic Alliances

Partnerships between two or more companies that combine resources, knowledge, and capabilities to pursue mutual interests or goals.

Shared Urgency

A situation or condition where a group of individuals collectively feel a compelling need to act promptly or swiftly.