On June 1, Electronics Distribution ships 100 TVs to TV World on consignment. Electronic Distribution's pays its wholesaler $500 for each TV. It then sells each TV for $800 to its retail customers including TV World. 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

Since Electronics Distribution ships the TVs on consignment, it does not recognize revenue for the sale until TV World sells the TVs to its customers. Therefore, no revenue is recognized for the 100 TVs shipped in June. The cost of the 100 TVs shipped in June is $500 x 100 = $50,000. Since TV World sold 50 units, Electronics Distribution will recognize revenue for those 50 units in July. The revenue recognized will be 50 units x $800 per unit = $40,000.

On June 1, Electronics Distribution Ships 100 TVs to TV