Problem
Stardust Furniture Store sells "low end" furniture and uses the installment method for revenue recognition. Its year-end is December 31. It shows the following data for January:
Sales of $6,840 with a 50% markup.
Sales terms: No down payment in January, no interest and 6 easy monthly payments starting in February.
• Assuming no other transaction happened, what revenue is recognized in January?
• Assuming no other transaction happened, what revenue is recognized in February?
• Assuming no other transaction happened, what cost of goods sold is recognized in March?
• Assuming no other transaction happened, what is the Gross Margin of April?