Question

1. On December 1, Year 1 Retail Sore sells a $1,500 computer. Customer Nancy pays $1,000 in cash and signs an installment agreement for the remaining $500 to be paid the following year. On the income statement how much revenue should be recognized? a. In Year 1 $1500 b. In Year 2 $0 2. In this accounting period, CYCLES purchased 10 bicycles for $150 each at wholesale and sold 6 bicycles for $400 each to customers. On the income statement of CYCLES, how much will be reported for: a. Sales Revenue? 400*6=52,400 b. Cost of Goods Sold?0+(150*10-4*150)=900 c. Gross Profit?2400 100-1500 d. The cost f the four unsold bicycles will remain part of inventory, COGS, or retained earnings)? it will be reported on the BSIS, RE, CF (which of the 4 financial statements)? What amount will be reported?

for questions B,C,D on number two please double check that I am correct and also i need help with what amount will be reported on d.

Answer 1

Your answer is correct for a) b) and c)

Sales – Cost of goods sold = Gross profit

Gross profit per unit = Selling price – Cost per unit = $ 400-$150 = $250 per unit

Total Sales revenue = $400* 6 = $2,400

Cost of goods sold = $150* 6 = $900

Total Gross profit = $250*6 = $1,500

For d) the cost of unsold bicycles will remain part of inventory

It will be reported on the Balance Sheet as Inventory (Under Current assets below Accounts receivable)

The amount to be reported is $600 ($150*4 bicycles)