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Show the relevant journal entries for Morty Ltd

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Reference no: EM132752497

Question -

a) Morty Ltd sells goods to Helen Ltd. The agreement between the two parties states that Helen Ltd pays for the goods in advance of delivery which will occur in 12 months' time. The control of the goods pass to Helen Ltd at the date of delivery. Helen Ltd pays $60 000 to Morty Ltd on 20 July 2019. Morty Ltd delivers the goods to Helen Ltd on 5 July 2020. The financial year end is 30 June.

b) Ruthie Ltd sells coffee machines to a retailer on a consignment basis. The retailer does not have an obligation to pay Ruthie Ltd until a sale occurs and any unsold products may be returned to Ruthie Ltd. On 8 January 2020, Ruthie Ltd sells 100 coffee machines valued at $40 000 ($400 per machine) and delivered on 10 January 2020 to the retailer. On 12 January 2020, the retailer sells 10 coffee machines to a customer at a price of $450 per machine.

Required - According to AASB 15 Revenue, explain when to recognise the revenue from these transactions by Morty Ltd and Ruthie Ltd and provide the reasons. Also show the relevant journal entries for Morty Ltd.

Reference no: EM132752497

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