Question: E3-3 LO3-2, 3-3

Identifying Revenues Revenues are normally recognized when the company transfers promised goods or services in the amount the company expects to be entitled to receive. The amount recorded is the cash-equivalent sales price. Assume that the following transactions occurred in September: a. A popular ski magazine company receives a total of $12,345 today from subscribers. The subscriptions begin in the next fiscal year. Answer from the magazine companys standpoint. b. On September 1 of the current year, a bank lends $15,000 to a company; the note principal and $1,500 ($15,000 10 percent) annual interest are due in one year. Answer from the banks standpoint. c. Fucillo Automotive Group (offering a wide variety of car and truck brands) sells a Ford F-150 truck with a list, or sticker, price of $34,050 for $32,000 cash. d. Macys department store orders 1,000 mens shirts for $16 each for future delivery from PVH Corp., manu facturer of IZOD, ARROW, Van Heusen, Calvin Klein, and Tommy Hilfiger and other brand-name apparel. The terms require payment in full within 30 days of delivery. Answer from PVH Corp.s standpoint. e. PVH Corp. completes production of the shirts described in (d) and delivers the order. Answer from PVHs standpoint. f. PVH Corp. receives payment from Macys for the events described in (d) and (e). Answer from PVHs standpoint. g. A customer purchases a ticket from American Airlines for $780 cash to travel the following January. Answer from American Airliness standpoint. h. Ford Motor Company issues $15 million in new common stock. i. Michigan State University receives $70,000,000 cash for 50,000 seven-game season football tickets to be played in the upcoming season. j. Michigan State plays the first football game referred to in (i). k. Precision Builders signs a contract with a customer for the construction of a new $1,500,000 ware house. At the signing, Precision receives a check for $200,000 as a deposit on the future construction. Answer from Precisions standpoint.

l. Best Buy receives inventory of 100 laptop computers from Dell; Best Buy promises to pay $96,000 within three months. Answer from Dells standpoint. m. Amazon.com delivers a $300 lamp to a customer who charges the purchase on his Amazon.com Store Card. Answer from Amazons standpoint. Required: For each of the transactions, if revenue is to be recognized in September, indicate the revenue account title and amount. If revenue is not to be recognized in September, explain why.