Question

Ryerson Co. provides goods and services to customers during the year totaling $100,000. Also during the year, customers are granted discounts, returns, and allowance of $20,000. At the end of the year, Ryerson estimates that an additional $5,000 in discounts, returns, and allowances will occur next year as a result of sales transactions this year. What is the amount of net revenues Ryerson will report in its current-year income statement?

Answer 1

$75,000

Step-by-step explanation:

According to matching concept the revenue and its related expenses should be recognized in the same period in which they incur. In this question discount related to current years sales are expected to be given in the next year so, it should be recognized now because the relevant revenue recorded this year.

Service Revenue $100,000

Discounts, returns, and allowance ($25,000)

($20,000 + $5,000)

Net Revenue $75,000