Question
1. Dolby Inc. receives a purchase order for 100 widgets from their customer, Surround Co. on Oct 1st. On Oct 5th, Dolby Inc. ships out
1. Dolby Inc. receives a purchase order for 100 widgets from their customer, Surround Co. on Oct 1st.
On Oct 5th, Dolby Inc. ships out the widgets FOB shipping point and invoices Surround Co.
On Oct 7th, the widgets arrive. Surround Co. pays Dolby Inc. on Oct 20th.
Existing credit terms dictate that Dolby Inc. has 30 days from the date of invoice to pay off the entire purchase price and all cancelled purchases are subject to a 10% (of purchase price) penalty.
From an accounting standpoint what is the earliest date on which a contract existed between Dolby Inc. and Surround Co.?
a. Oct 1st
b. Oct 5th
c. Oct 7th
d. Oct 20th
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