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Entity A is a trading company listed in Hong Kong for 10 years. On 15 July 2021, Entity A received an order from a new
Entity A is a trading company listed in Hong Kong for 10 years. On 15 July 2021, Entity A received an order from a new customer, Entity B, for products with a sales value of $4,985,600. The cost of sales is $3,246,800. Entity B enclosed a deposit of 15% of the sales value for this order. On 31 July 2021, Entity A had not completed credit checks on Entity B and had not despatched any goods. Entity A is considering the following possible accounting treatment for this transaction in its financial statements for the year ended 31 July 2021. REQUIRED: State the accounting treatments of recording this transaction in its financial statements for the year ended 31 July 2021. ANSWER: Revenue = Liability =
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