Data Recovery Services (DRS) specializes in data recovery from crashed hard drives. The price charged varies based on the extent of damage and the amount of data being recovered. DRS offers a 20% discount to students and faculty at educational institutions. Consider the following transactions during the month of June. June 10 Rashid’s hard drive crashes and he sends it to DRS. June 12 After initial evaluation, DRS e-mails Rashid to let him know that full data recovery will cost $2,900. June 13 Rashid informs DRS that he would like them to recover the data and that he is a student at UCLA, qualifying him for a 20% educational discount and reducing the cost by $580 ( = $2,900 × 20%). June 16 DRS performs the work and claims to be successful in recovering all data. DRS asks Rashid to pay within 30 days of today’s date, offering a 3% discount for payment within 10 days. June 19 When Rashid receives the hard drive, he notices that DRS did not successfully recover all data. Approximately 25% of the data has not been recovered and he informs DRS. June 20 DRS reduces the amount Rashid owes by 25%. June 30 Rashid pays the amount owed. 2. Show how net revenues would be presented in the income statement. DATA RECOVERY SERVICES Partial Income Statement Total service revenues Less: Sales allowances 580 Net service revenues $1,74

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 43E

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Data Recovery Services (DRS) specializes in data recovery from crashed hard drives. The price charged varies based on the extent of damage and the amount of data being recovered. DRS offers a 20% discount to students and faculty at educational institutions. Consider the following transactions during the month of June.

June	10	Rashid’s hard drive crashes and he sends it to DRS.
June	12	After initial evaluation, DRS e-mails Rashid to let him know that full data recovery will cost $2,900.
June	13	Rashid informs DRS that he would like them to recover the data and that he is a student at UCLA, qualifying him for a 20% educational discount and reducing the cost by $580 ( = $2,900 × 20%).
June	16	DRS performs the work and claims to be successful in recovering all data. DRS asks Rashid to pay within 30 days of today’s date, offering a 3% discount for payment within 10 days.
June	19	When Rashid receives the hard drive, he notices that DRS did not successfully recover all data. Approximately 25% of the data has not been recovered and he informs DRS.
June	20	DRS reduces the amount Rashid owes by 25%.
June	30	Rashid pays the amount owed.