Question

On January 20, 2018, Kostas Company enters into a contract to build custom equipment for ABC Carpet Company. The contract specified a delivery date of March 1. The equipment was not delivered until April 30. The contract required full payment of $75,000 30 days after delivery. The revenue for this contract should be

a.recorded on April 30, 2018.

b.recorded on March 31, 2018.

c.recorded on January 15, 2018.

d.recorded on March 1, 2018.

Answer 1

b.recorded on March 31, 2018.

Step-by-step explanation:

Given that

Date of entering into a contract is Jan 20, 2018

The delivery date is until April 30

Received full payment after 30 days of delivery i.e March 31

By considering the above information, the revenue for this contract should be taken on March 31 as the amount would be fully received after 30 days of delivery i.e March 31 and the same is recorded in the books of accounts