The following situation is in chronological order. 1. Parker decides to buy a surfboard. 2. He calls Surfing USA Co. to inquire about its surfboards. 3. Two days later, he requests Surfing USA Co. to make a surfboard. 4. Three days later, Surfing USA Co. sends him a purchase order to fill out. 5. He completes and sends back the purchase order. 6. Surfing USA Co. receives the completed purchase order. 7. Surfing USA Co. completes the surfboard. 8. Parker picks up the surfboard. 9. Surfing USA Co. bills Parker. 10. Surfing USA Co. receives payment from Parker. In a memo to the president of Surfing USA Co., answer the following. (a) When should Surfing USA Co. record the sale? (b) Suppose that with his purchase order, Parker is required to make a down payment. Would that change your answer?
The following situation is in chronological order. 1. Parker decides to buy a surfboard. 2. He calls Surfing USA Co. to inquire about its surfboards. 3. Two days later, he requests Surfing USA Co. to make a surfboard. 4. Three days later, Surfing USA Co. sends him a purchase order to fill out. 5. He completes and sends back the purchase order. 6. Surfing USA Co. receives the completed purchase order. 7. Surfing USA Co. completes the surfboard. 8. Parker picks up the surfboard. 9. Surfing USA Co. bills Parker. 10. Surfing USA Co. receives payment from Parker. In a memo to the president of Surfing USA Co., answer the following. (a) When should Surfing USA Co. record the sale? (b) Suppose that with his purchase order, Parker is required to make a down payment. Would that change your answer?
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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Question
The following situation is in chronological order.
1. | Parker decides to buy a surfboard. | ||
2. | He calls Surfing USA Co. to inquire about its surfboards. | ||
3. | Two days later, he requests Surfing USA Co. to make a surfboard. | ||
4. | Three days later, Surfing USA Co. sends him a purchase order to fill out. | ||
5. | He completes and sends back the purchase order. | ||
6. | Surfing USA Co. receives the completed purchase order. | ||
7. | Surfing USA Co. completes the surfboard. | ||
8. | Parker picks up the surfboard. | ||
9. | Surfing USA Co. bills Parker. | ||
10. | Surfing USA Co. receives payment from Parker. |
In a memo to the president of Surfing USA Co., answer the following.
(a) | When should Surfing USA Co. record the sale? | |
(b) | Suppose that with his purchase order, Parker is required to make a down payment. Would that change your answer? |
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