Reference no: EM132462784

KC Plastics Inc., (KC) had the following three independent events occurred in 2018. The year-end is December 31st.

Event 1: On December 31, 2018, KC sold a machine for $125,000 and collected $25,000 as a down payment. The remainder was financed at 10% interest and is payable on December 31, 2019. KC will deliver to SF Loses Inc. on January 19th 2019 which title will be transferred.

Event  2: On June 15, 2018, the company received $30,000 from a client. The payment was deposit for services to be provided from July 1, 2018 to June 30, 2019. During 2018, additionally work was completed and invoiced by KC Plastics Inc.

Event  3: On October 15, 2018, KC sold concentrated colourant for $7,500. The colourant was delivered on that date. KC agreed that SB54 the purchaser to pay for the product with 3 totes of resin that sell for $2,000 a tote. SB54 promised to deliver the resin by February 28, 2019.

Give a brief report and explain each of the above noted events:

Question 1. When should revenue be recognized?

Question 2. The entry that should be made on the transaction date, if required.

Question 3. Explain the reasoning for your decisions.