Apply GAAP for proper revenue recognition
Response to the following :
Refer to the facts in problem. Suppose that when store personnel uncrate the shipment of merchandise, they find that a shipment of clothing worth $6,100 is defective. They notify R Patrick of the problem and return the shipment to the company. What entry will R Patrick make?
Problem:
Apply GAAP for proper revenue recognition
On December 23, 2014, R Patrick Sports Manufacturing sells a truckload of sporting goods to the Sports R Us store in Amarillo, Texas. The terms of the sale are FOB destination. The truck runs into bad weather on the way to Amarillo and doesn't arrive until January 2, 2015. R Patrick Sports Manufacturing's invoice totals $308,000 including sales tax. The company's year-end is December 31. What should R Patrick Sports Manufacturing reflect in its 2014 income statement for this sale?