Assume That a Firm Uses the Accrual Basis of Accounting

question 74

Short Answer

Assume that a firm uses the accrual basis of accounting.For each of the following independent cases, indicate the amount of revenue the firm recognizes for the month of August.
a. Collects $2,000 in July for merchandise to be delivered in August.
b. Collects $1,200 in May for subscriptions that will be delivered during the next twelve months (beginning in May).
c. Collects $800 in August for merchandise sold and delivered in July.
d. Collects $2,400 interest on a 6-month certificate of deposit, which matures on August 15th.
e. Sells $3,000 of merchandise on account in August. The firm allows a 2% discount for payment prior to 30 days and customers take the discount.

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Definitions:

Short-term Note Payable

A debt obligation due within one year or less, often used for short-term financing needs or working capital requirements.