In Its Accrual-Basis Income Statement for the Year Ended December

question 12

Essay

In its accrual-basis income statement for the year ended December 31,2014,Ralph Company reported revenue of $2,565,000.Additional information was as follows:
$\begin{array}{lr}\text { Accounts receivable 12/31/13 } & \$ 418,500 \\\text { Uncollectible accounts written off during 2014 } & 17,200 \\\text { Accounts receivable 12/31/14 } & 391,700\end{array}$
Required:
Under the cash basis of net income determination,how much should Ralph report as revenue for 2014?

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Definitions:

Traditional Costing Method

A costing methodology that allocates overhead costs based on a single, volume-based cost driver, such as labor hours or machine hours.

Direct Labor-Hours

The total time workers spend on producing a product, directly correlating to the product itself.

Unit Product Cost

An expression of the total production cost (materials, labor, and overhead) divided by the number of units produced.

Traditional Costing Method

An accounting strategy that allocates overhead costs to products based on a predetermined rate, without considering the actual activities that incur costs.