Question :
Ankiel Securities Division
Ankiel Securities Division works throughout manufacturers' agents in different cities to process orders for its alarm systems. Orders and down payments are forwarded from agents, and the company ships the goods straight to customers (usually police departments and security guard companies). The division bills the customers straight for the balance due plus actual shipping costs. The subsequent information is available for the fiscal year ended November 30, 20Y4:
a. The company received orders for $6,000,000 and down payments of $800,000 through the year. Goods of $5,400,000 were billed and shipped fob shipping. The down payments formerly received related to these shipped orders. The division identifies revenue at the point of sale.
b. The company's profit margin is 20 percent of cost.
c. Actual freight costs of $100,000 were billed to customers.
d. Commissions of 10 percent on product price are paid to manufacturing agents when goods are shipped to customers.
e. The alarm systems are warranted for 90 days after shipment, and warranty returns have been about 1 percent of sales. Actual warranty costs through the year totaled $35,000.
Revenue to be recognized in 20Y4: ______________________________