Professional Simulation In this simulation, you are asked to address questions related to revenue recognition issues. Prepare responses to all parts.

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KWW Professional Simulation Revenue Recognition Time Remaining 3 hours 00 minutes TII Directions Measurement Joumal Entries Financial Statements Explanation Resources Outback Industries manufactures emergency power equipment. Its most popular generator is a model called the E-Booster, which has a retail price of 1,500 and costs Outback 740 to manufacture. It sells the E-Booster on a standalone basis directly to businesses, as well as provides installation services. Outback also distributes the E-Booster through a consignment agreement with Marks and Spencer (M&S) (GBR). Income data for Outback's first quarter of 2015 from operations other than the E-Booster generator are as follows: Revenues Expenses 6,500,000 4,350,000 Outback has the following information related to four E-Booster revenue arrangements during the first quarter of 2015. 1. Outback entered into an arrangement with the Grocers Co-op in east London to deliver E-Boosters for the meat lockers in the grocers' stores. Outback provides a 5% volume discount for E-Boosters purchased by Grocers if at least 450,000 of E-Boosters are purchased during 2015. By March 31, 2015, Outback has made sales of 360,000 to Grocers Co-op. Based on prior experience with this promotion in two neighboring districts, Outback met the discount threshold for the year if more than one-half of the target had been met by mid-year. 2. On January 1, 2015, Outback sells 20 E-Boosters to Nick's Wine Shops. Nick's signs a 6-month note due in 6 months at an annual interest rate of 12%. Outback allows Nick's to return any E-Booster that it cannot use within 60 days and receive a full refund. Based on prior experience, Outback estimates that three units will be returned (using the most likely outcome approach). Outbacks' costs to recover the products will be immaterial, and the returned generators are expected to be resold at a profit. 3. Outback ships 300 E-Boosters to M&S on consignment. By March 31, 2015, M&S has sold three-fourths of the consigned merchandise at the listed price of 1,500 per unit. M&S notifies Outback of the sales, retains an 8% commission, and remits the cash due to Outback. Direction Stunton Masurment Journal Entries Facial Statements Explanation Resources Determine net income for Outback for 2015. (Ignore income taxes.) Directions Situation Measurement Journal Entries Financial Statements Explanation Resources Prepare the journal entries to record the consignment sales. Directions Station Measurement Joumal Entries Financial Explanation Flexur Outback is negotiating construction contracts with some new customers, which are more uncertain as to their ability to make all payments. Briefly discuss the relevance of collectibility for revenue recognition.