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Stanfield Equipment Sells New Tractors and Pays Each Salesperson a Commission

Question 3

Multiple Choice

Stanfield Equipment sells new tractors and pays each salesperson a commission of $1,000 for each tractor sold. During the month of August, a salesperson, Jason, sold 3 new tractors. Stanfield pays Jason on the 10th day of the month following the sale. Jason operates on the cash basis; the tractor dealer operates on the accrual basis. Which of the following statements is true?


A) Stanfield will recognize commission revenue earned in the amount of $3,000 in August.
B) Stanfield will recognize commission expense in the amount of $3,000 in August.
C) Jason will recognize commission expense in the amount of $3,000 in September.
D) Jason will recognize revenue in the same month that the tractor dealer recognizes expense.

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