Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 18: 12BE (page 1033)

Manual Company sells goods to Nolan Company during 2017. It offers Nolan the following rebates based on total sales to Nolan. If total sales to Nolan are 10,000 units, it will grant a rebate of 2%. If it sells up to 20,000 units, it will grant a rebate of 4%. If it sells up to 30,000 units, it will grant a rebate of 6%. In the first quarter of the year, Manual sells 11,000 units to Nolan at a sales price of $110,000. Manual, based on past experience, has sold over 40,000 units to Nolan, and these sales normally take place in the third quarter of the year. What amount of revenue should Manual report for the sale of the 11,000 units in the first quarter of the year?

Short Answer

Expert verified

Sales Revenue is $105,600.

Step by step solution

01

Meaning of Sales Revenue

The amount received by a company through the sale of goods or supply of services is known as sales revenue. Its calculation requires price per unit to be multiplied by the number of units sold.

02

Sales revenue for the first quarter of the year

The amount of revenue recognized by Manual for the sale of the 11,000 units sold in the first quarter of the year is based on 4% of the rebate is as follows:

Salesrevenue=Sellingprice×Discountrate=$110,000×1-0.04=$110,000×0.94=$105,600

Therefore, Sales revenue for the first quarter of the year is $105,600.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Telephone Sellers Inc. sells prepaid telephone cards to customers. Telephone Sellers then pays the telecommunications company, TeleExpress, for the actual use of its telephone lines related to the prepaid telephone cards. Assume that Telephone Sellers sells \(4,000 of prepaid cards in January 2017. It then pays TeleExpress based on usage, which turns out to be 50% in February, 30% in March, and 20% in April. The total payment by Telephone Sellers for TeleExpress lines over the 3 months is \)3,000. Indicate how much income Telephone Sellers should recognize in January, February, March, and April.

Allee Corp evaluates a revenue arrangement to determine proper revenue recognition. The contract is for the construction of 10 speedboats for a contract price of \(400,000. The customer needs the boats in its showrooms by February 1, 2018, for the boat purchase season; the customer provides a bonus payment of \)21,000 if all ships are delivered by the February 1 deadline. The bonus is reduced by $7,000 each week that the boats are delivered after the deadline until no compensation is paid if the ships are provided after February 15, 2018. Allee frequently includes such bonus terms in its contracts and thus has good historical data for estimating the probabilities of completion at different dates. It calculates an equal likelihood (25%) for each delivery outcome. What approach should Allee use to determine the transaction price for this contract? Explain.

What are the reporting issues in a sale with a repurchase agreement?

What qualitative and quantitative disclosures are required related to revenue recognition?

What is a performance obligation? Under what conditions does a performance obligation exist?
See all solutions

Recommended explanations on Business Studies Textbooks

Strategic Direction

Read Explanation

Managers

Read Explanation

Financial Performance

Read Explanation

Human Resources

Read Explanation

Managerial Economics

Read Explanation

Change Management

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free