During 20X2, its second year in operation, Banner Company delivered goods to customers for which customers paid or promised to pay $5,850,000. The amount of cash collected from customers was $5,960,000. The amount of trade receivables at the beginning of 20X2 was $1,200,000. What is the amount of sales revenue that Banner should report on its statement of earnings for 20X2?

Question

Quizplus · Accepted Answer

Sales revenue is recognized when goods are delivered to customers, regardless of when the cash is collected. Therefore, Banner should report $5,850,000 as sales revenue for 20X2, which is the amount for which customers paid or promised to pay during the year.

During 20X2, Its Second Year in Operation, Banner Company Delivered