Economics · Revenue Recognition
On 19 December 20X7, Pearce Co sells goods worth $24,000 to Level Co and issues an invoice. Delivery is delayed until 20 January 20X8 at the buyer's request due to limited availability. Pearce Co sets the goods aside in a separate area of its warehouse, clearly identifying them. The sales margin is 15%. What is the correct accounting treatment for Pearce Co as at 31 December 20X7 under a bill-and-hold arrangement?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Dr Cost of Sales $24,000; Cr Inventory $24,000
- 2Dr Cost of Sales $20,400; Cr Inventory $20,400
- 3Dr Trade Receivable $24,000; Cr Revenue $24,000; Dr Cost of Sales $20,400; Cr Inventory $20,400✓
- 4Dr Revenue $24,000; Cr Trade Receivable $24,000
Correct answer
Dr Trade Receivable $24,000; Cr Revenue $24,000; Dr Cost of Sales $20,400; Cr Inventory $20,400
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