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Lowen Homes,Inc

question 160

Essay

Lowen Homes,Inc.pays its sales personnel 6% commission of the selling price of each home.During November 2017,sales people sold $18,400,000 of homes.During December 2017,sales people sold $20,050,000 of homes.Because its policy is to pay commissions only in the month after the sales,Lowen paid commissions during December for November 2017.During January 2018,Lowen paid its salespeople commissions for December 2017.
A. If the cash basis of accounting is used, how much commission expense is reported on Lowen Homes' income statement for December of 2017 ?

B. If the accrual basis of accounting is used, how much is reported as commission expense on Lowen Homes' December income statement for 2017 ?


Definitions:

Samples

A subset of a larger population, selected for measurement, observation, or questioning to provide statistical information about the population.

Degrees of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution, affecting the calculation of statistical parameters.

Sample Groups

Subsets of a population selected to participate in a study, allowing for inferences about the whole population.

Factor

Another word for the independent variable of interest.

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