Reference no: EM13501572

Revenue is normally recognized when the delivery of goods or services has occurred, there is persuasive evidence of an arrangement for the customer payment, the price is fixed or determinable, and collection is reasonably assured. The amount recorded is the cash-equivalent sales price. The following transactions occurred in one month. For each transaction, determine if revenue is to be recognized in that month. If so, indicate the revenue account title and amount. If not, explain why.

(a) A fitness center receives a total of $22,000 for new membership fees. The memberships are activated the next fiscal year. Answer from the fitness center's standpoint.

(b) On the first day of the month, a bank lends $10,000 to a company; the note principal and $1,200 annual interest are due in one year. Answer from the bank's standpoint.

(c) A company sells a truck with a list, or "sticker" price of $32,000 for $28,150 cash.

(d) A company pre-orders $4,000 worth of produce from a store. The terms require payment in full within 30 days of delivery. Answer from the store's standpoint.

(e) The store completes the goods descripted in (d) and delivers the order to the company. Answer from the store's standpoint.

(f) The store receives payment from the company for the events described in (d) and (e). Answer from the store's standpoint.

(g) A customer purchases airline tickets for $800 cash to travel the following year. Answer from the airlines' standpoint.

(h) A company issues $12 million in new common stock.

(i) A vendor receives $32,000 cash for four theater productions.

(j) The vendor showcases the first production referred to in (i).

(k) A contracting company signs a contract with a customer for the construction of a new building worth $1.2 million. At the signing, the company receives a check for $100,000 as a deposit on the future construction. Answer from the company's standpoint.

(l) A customer orders and receives 10 items from a company; the customer promises to pay $4,400 within the year. Answer from the company's standpoint.

(m) A store sells a $600 television to a customer who charges the sale on his store credit card. Answer from the store's standpoint.