During the current year, Sierra Corporation sold $1,250,000 in goods that cost $750,000.Cash sales were $500,000 and credit sales $750,000.Sierra collected $500,000 of the credit sales during the year.What amount of revenue should Jamul recognize for the year under the revenue recognition principle?

Question

Quizplus · Accepted Answer

Under the revenue recognition principle, revenue is recognized when it is earned and realizable, regardless of when the cash is received. Sierra Corporation earned $1,250,000 from sales during the year, so this is the amount of revenue to recognize.

During the Current Year, Sierra Corporation Sold $1,250,000 in Goods