Question
Suppose your firm receives a $4.6 million order on the last day of the year. You fill the order with $2.9 million worth of inventory.
Suppose your firm receives a $4.6 million order on the last day of the year. You fill the order with $2.9 million worth of inventory. The customer picks up the entire order the same day and pays $1.6 million upfront in cash; you also issue a bill for the customer to pay the remaining balance of $3.0 million in 30 days. Suppose your firm's tax rate is 0.0%; that is, ignore taxes. Determine the consequences of this transaction for each of the following, noting that items a1, a2, and b are income-statement line items and items c, d, and e are balance-sheet accounts:
a.
1. Revenues
and
2. Cost of Goods Sold
b. Earnings
c. Receivables
d. Inventory
e. Cash
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