On January 10, KH sold a mixer it purchased from MU for $80 cash and delivered it to a customer. KH has a 45-day return policy under which a customer can exchange a product for another product of the same type, quality, condition and price. The exchange policy requires that all returned products must be like new. Based on extensive historical experience, KH estimates that 2% of its products will be exchanged by customers for another product of the same price, condition, quality and type. KH estimates the cost of recovering any products will be insignificant. KH does not record any potential volume discounts until they are earned.

Requirements

? Record all initial accounting entries for KH for January 10 based on the current guidance on revenue recognition in ASC 605. Include references to the guidance to support your proposed accounting. Show any calculations you make to support your journal entries.

? Prepare a detailed explanation of each of the five steps of revenue recognition. Record all initial accounting entries for MU for January 10 based on the new guidance on revenue recognition in ASC 606. Include references to the guidance to support your proposed accounting. Show any calculations you make to support your journal entries.

? What, if anything, is the difference in revenue recognized for the month of January under ASC 605 and ASC 606?

Bob Fuji began business on January 1, 2018 with a Balance Sheet that listed $ 300,000 of Cash and $ 300,000 of Shareholders' Equity.  During 2018, the following inventory related transactions took place:

Produced 15,000 units of inventory @ a cost of $ 20 per unit

Delivered 12,000 units of inventory to customers with a selling price of $ 28 per unit

Collected $ 280,000 of cash related to 10,000 units of inventory

The above transactions were the only transactions for the firm, and the "year-end" selling price of inventory is $ 28.

D. (3)    If Bob Fuji recognizes revenue at the Completion of Production, Total Assets on

          Bob Fuji's December 31, 2018 Balance Sheet will be equal to $ _____________

E. (4)    If Bob Fuji recognizes revenue at the Time of Cash Collection, Total Assets on

          Bob Fuji's December 31, 2018 Balance Sheet will be equal to $ _____________

F. (3)   _____    Assume that (other than collecting the amount of money that he was

                        owed at the end of 2018) in 2019, the only activity of Bob Fuji is that he

                        "liquidates" any remaining inventory, receiving cash in the amount of

                       $ 25 per unit.  

G. If Bob recognizes revenue at "Time of Cash Collection", which of the following items will be GREATER than $ 0 on Bob Fuji's 2019 Income Statement?

                        A. Revenue

                        B. Net Income

                        C. Both A and B

                        D. None of the above    

Interns,

Mr. Howell, the prestigious founder and owner of our company would like you to perform an analysis on the company’s weekly revenues. He is requiring that the current weekly marginal revenue be at least $5,000 per week and if it is not currently at that level how fast should sales be changing to reach the target marginal revenue level. The most current information regarding weekly revenues can be found in Mr. Howell’s email below.

To be solved using derivatives.

“Mr. Kleppin,

It has come to my attention that our weekly marginal revenues may not be at the minimum level of $5,000 per week as I required. According to the sales report, we are currently selling 1,000 DVD’s per week and sales are currently rising by 200 DVD’s a week (gotta love the Marvel Universe! Customers can’t get enough!). They also inform me that our current selling price is $20 and that the price is dropping by $1 per week to encourage more sales. I would like you, Mr. Kleppin, to give the interns a chance to earn one of the 10 available positions at the end of their internship by giving them the opportunity to do the analysis. Again, I need to know if we are at the minimum level of $5,000 per week in marginal revenue, and if not, at what level should our sales per week be at so as to achieve the minimum marginal revenue level.”

1. Which of the following statements is NOT true about the Revenue Management?
a. Revenue management is based on setting and updating prices.
b. Revenue management is originated in the airline industry.
c. Through revenue management, the firms can allocate their capacity to different fare classes over time in order to maximize revenue.
d. Revenue management focuses on shaping demand via controlling supply under the limited capacity.

2. According to the Littlewood’s Rule, which of the following does NOT generate pressure to increase the booking limit?
a. Increase in the full-fare price
b. Increase in the discount-fare price
c. Increase in the plane capacity
d. Decrease in the average full-fare demand

3. A hotel has 200 rooms and the historical show rate is 90%. What will be the (closest) optimal overbooking level given by the deterministic overbooking heuristic?
a. 222
b. 180
c. 200
d. None of the above
e. 220

What is total revenue? What is marginal revenue? Describe the economic intuition of these concepts for energy markets.

What is a Core Revenue Recognition Principle on which revenue can be recognized by sellerWhat is a Core Revenue Recognition Principle on which revenue can be recognized by seller

which of these items) is relevant in deciding which tour to offer?

A. Revenue

B. Revenue and Variable Costs
C. Variable costs

D. Variable and Fixed Costs

Revenue is recognized based on a five-step process that is applied to a company’s revenue arrangements. Briefly describe the five-step process. Explain the importance of contracts when analyzing revenue arrangements. How are fair value measurement concepts applied in the implementation of the five-step process? How does the five-step process reflect the application of the definitions of assets and liabilities?