On June 1, Electronics Distribution ships 100 TVs to TV World on consignment. The cost of each unit is $500 and the unit selling price is $800. At the end of June, TV World sold 50 units. How much revenue should be recorded by Electronics Distribution for the month of June?
A)$80,000
B)$50,000
C)$40,000
D)$25,000

Question

Quizplus · Accepted Answer

Revenue is recognized when the goods are sold. As TV World sold 50 units at a selling price of $800 each, the revenue generated is $40,000 (50 units x $800 selling price). Even though the TVs were sold on consignment, the revenue should be recognized by Electronics Distribution because the risk and rewards of ownership have been transferred to TV World. Therefore, Choice C is the correct answer.

On June 1, Electronics Distribution Ships 100 TVs to TV