III. SHORT CASES A. Jim's Tune-up Shop follows the revenue recognition principle. Jim finished repairing a car on July 31. The customer picked up the vehicle on August 1 and mailed the payment to Jim on August 5. Jim received the check in the mail on August 6. REQUIRED: What date should Jim show that the revenue was earned? Justify your answer. (5 Pts.) B. As you know, revenue is ordinarily recognized at the point of sale or exchange, when the earnings process is complete (or virtually complete) and when the amount of revenue can be objectively measured. For most businesses these tests are met when merchandise is sold or services rendered. Like so many rules, the revenue recognition principle has exceptions in some unique cases, like long term construction projects, certain farm products, or precious metals. Consider the America Health Fitness Club that sells lifetime memberships for $1,000 each. Lifetime members are entitled to use of the facilities for the remainder of their lives. America's experience and research shows that 70 percent of lifetime members stop attending and no longer use the facilities for approximately 3 years. Another 20 percent use the facilities for approximately 3 years, and the remaining 10 percent continue to visit the health club throughout their lives. REQUIRED: When do you believe a $1,000 receipt from a lifetime member should be recognized as revenue? Justify your answer. (10Pts.)