Revenue Recognition Alternatives
Slattery Company was formed on January 1, 2013, to build a single product. The company issued no-par common stock on that date for $260,000 cash. The product costs $18 to make, all of which is paid in cash at the time of production. Slattery sells each unit of the product for $35 on credit and incurs sales commissions per unit of $3 cash. In 2013, Slattery produced 13,000 units, shipped 11,000 units, and received payment for 9,000 units.
1a. Prepare the 2013 income statement under revenue recognition at the completion of the earnings process.
Income Statement (2013)
Revenue
Cost of goods sole
Selling expense
Net Income
Prepare the 2013 ending balance sheet under revenue recognition at the completion of the earnings process.
Cash
Accounts receivable
Inventory
Total
Common stock, no par
Retained earnings
Total
1b. Prepare the 2013 income statement under revenue recognition prior to the completion of the earnings process. Requried:
Revenue
Production expense
Selling expense
Net Income
Prepare the 2013 ending balance sheet under revenue recognition prior to the completion of the earnings process. Required:
Cash
Accounts receivable
Inventory
Total
Accured selling expenses
Common stock, no par
Retained earnings
c. Prepare the 201income statement under revenue recognition at the completion of the earnings process as cash is received. Required
Revenue
Cost of goods sold
Selling expense
Net Income
Prepare the 2013 ending balance sheet under revenue recognition at the completion of the earnings process as cash is received. Required:
Cash
Prepaid selling expenses
Inventory
Total
Common stock, no par
Retained earnings
Total