Apply GAAP for proper revenue recognition
Response to the following :
Refer to the facts in problem. The sales terms on the invoice are 2/10, net 30. What does this mean? What is Sports R Us' potential savings, if any? How much time does the company have to take advantage of these savings?
Problem:
Apply GAAP for proper revenue recognition
On December 23, 2014, R Patrick Sports Manufacturing sells a truckload of sporting goods to the Sports R Us store in Amarillo, Texas. The terms of the sale are FOB destination. The truck runs into bad weather on the way to Amarillo and doesn't arrive until January 2, 2015. R Patrick Sports Manufacturing's invoice totals $308,000 including sales tax. The company's year-end is December 31. What should R Patrick Sports Manufacturing reflect in its 2014 income statement for this sale?