Case 5-3 Joan Holtz

Topics: Revenue, Cost of goods sold, Generally Accepted Accounting Principles Pages: 3 (724 words) Published: November 26, 2011

Question 1:
Electricity usage normally constant for every month, the unreported usage for December will be accounted in following month, in this case, it will be on January. Revenues for the year should be physically accurate.

Question 2:
It may be counted as $5,000 as revenue in 2010. This is because the payment was made on July 2010 whereby the service provided only 6 months for year of 2010 (50% of the $10,000). The balance should be counted in following year, 2011. Another way may taken to account is by counting the whole $10,000 as payment for year 2001 and others upcoming services to be billed separately at each month the service provided.

Question 3:
No revenue should be counted on 2010. Revenue should be counted until Raymond completed the services as in sales agreement or purchase orders whereby the revenue should be counted only after service provided on 2011. Revenue still has not yet booked should a passenger cancel his reservations before the trip took place. The difference would be made when the trip has taken off.

Question 4:
No revenue is recognized in 2010. If the nursery owner wanted to keep trees growing for a year more, his revenue might be higher. This means, he should not report any revenue in 2010. Furthermore, there is no sales order or goods have not been delivered for the owner to report revenue on 2010.

Question 5:
Unbilled receivables are earned revenue, as the time the architects used for the project is being referred as service, on accrual basis (given that is the service is received by the customer). But then, the receivable (which is the architects’ time), counted as unbilled receivables, is not being billed yet to their customer, hence come the term unbilled receivables. It is a big difference to consider the in-process work as receivables rather than inventory. Inventory is something that can be sold/rent/use, such as physical products or place (e.g. theater’s seat, bed, and room)....
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