Question

Daymond John grew up in the heart of hip-hop culture: Hollis, Queens. In his early 20s, as many of you, he was working as a waiter at the restaurant (Red Lobster) and trying to figure out how to start a business. Eventually, he stumbled on the idea of making clothes for fans of rap music. In 1992, he started FUBU (For Us By Us) and began selling hats outside of a local mall. Three years later, FUBU was bringing in $350 million in sales. Later he was a judge on Shark Tank, and he is a motivational speaker and author. After the trading show in Las Vegas Daymond John signed $300,000 worth of orders from retailers. Let's assume that Daymond followed US Generally Accounting Principles for his business. What journal entry did FUBU make on the day the contracts were signed? Inome Statements Assets Net Liables Stockholders' Equity Revenue - Expense = Options Cash Accounts U nared Commen payable revenue warnings 300.000 + 300.000 + = B 300.000 300.000 300.000 300.000 300.000 D Nothing, signing the centre dos tonttute an accounting transaction A

Answer 1

Signing the contract does not require any accounting entry in books of accounts. It is for documentation purposes.

Under the Accrual basis of accounting, revenue is recognized only when goods are shipped to customer along with all risks and rewards of ownership.

Nothing, signing the contract does not constitute an accounting transaction.

Option D is correct