Question

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on-refundable membership fees from customers. 29. Costco Wholesale Core Alholesale Corporation collects annual non-refundable membership fees When should Costco recognize revenue for these membership fees 2 Immediately when cash is received because the fees are nonrefundable B) Evenly over the membership year C) Evenly over the current fiscal year the membership year when Costco has discharged its obligation to the customer D) At the end of the membership year when Costco has discharge E) Pro rata over the customer's actual purchasing pattern 30 Ticketmaster contracts with the producer of Blue Man Group to sell tickets online Ticket er of Blue Man Group to sell tickets online. Ticketmaster charges each customer a fee of $9 per ticket and receives $22 per ticket from the producer Ticketmaster de not take control of the ticket inventory. Average ticket price for the event is $105 How much revenue should Ticketmaster recognize for each Blue Man Group ticket sold? A) $9 because the $22 from the producer is similar to a negative cost of goods sold B) $105 because the $83 is cost of goods sold paid to the Blue Man Group producer C) $31 because both the fee from the customer and the Blue Man Group producer are eamed D) $114 because the $83 is cost of goods sold paid to the Blue Man Group producer E) None of the above 31. The 2016 income statements of Leggett & Platt, Inc. reports net sales of $3,749.9 million. The balance sheet reports accounts receivable, net of $486.6 million at December 31, 2016 and $520.2 million at December 31, 2015 The days sales outstanding in 2016 was: A) 49 days B) 10 days c) 44 days D) 8 days E) None of the above 32. At what amount will accounts receivable be reported on the balance sheet if the gross receivable balance is $50,000 and the allowance for uncollectible accounts is estimated at 16% of gross receivables? A) $6,300 B) $42.000 C) $50,000 D) $28,700 33. Apple, Inc. reported research and development expense of $10,045 million on its 2016 income statement. This expense included many types of costs. Which of the following types of costs would not be included in the $10,045 million? A) Salaries and wages for R&D personnel B) Costs of applying for FDA approval C) Depreciation on equipment used in experiments D) Supplies and inventory related to R&D activities and new product sales E) None of the above

Answer 1

29) Revenue recognition required earning process transaction should be completed. In the given case membership service would be completed during the year. Hence, the correct option is B (Evenly over the membership year) 30) Ticketmaster receive $9 as fees from each customer and $22 from producer of blue man group for selling ticket online. Therefore he recognize ($9 +$22) as revenue eamed when they sell ticket because transaction is completed by the Ticketmaster. Hence, the correct option is C

31) Compute Days sales outstanding as follows: Average accounts receivable Days sales outstanding =- Credit sal e ($520.2+486.6)/2 245 =x365 $3,749.9 $503.4 x365 *365 $3,749 = 149 days Hence, the correct option is A. 32) Compute Net Accounts receivable as follows:

Net Accounts receivable=Gross Accounts receivables -Allowance for uncollectible = $50,000-($50,000x16% = $50,000-$8.000 = $42,000 Hence, the correct option is B 33) Supplies and inventory related to R&D activities and new product sales are not recognize as R&D expense in 2016 income statement. Hence, the correct option is D