Question

Steve Russell started a snow removal business he called Total Care Services. Over the fall months, Total Care pre-sold snow removal services to be performed from November through April of the following fiscal year, inclusive. If payment is made in full by November 1, a 10% discount is allowed. In October 270 customers took advantage of the discount and purchased the winter snow removal service package priced at $520 each, before the discount. Due to the heavy snowfall, another 310 customers purchased the package for $625 each in December, and in January, another 270 purchased it for the reduced price of $580 each Calculate the amounts for each of the three groups of payments and insert in the following table for each month the amount of revenue to be recognized by Total Care, as well as totals. Assume that the amount of revenue is allocated evenly over the month of service. (Do not leave any answer field blank. Enter for amounts.) October November December January $ $ $ $ $ $

Answer 1

Solution:

Below is the revenue to be allocated:

October November December 21,060 1st group 2nd group 3rd group January February March April Totals 21,060 21,060 21,060 21,060 21,060 126,360 38,750 38,750 38,750 38,750 38,750 193,750 39,150 39,150 39,150 39,150 156,600 59,810.00 98,960.00 98,960.00 98,960.00 98,960.00 476,710 Totals 0.00 21,060.00

Working:

Amount in Revenue Recognized Per Month $(A) Working months(B) Revenue(A/B) Amount from the 1st group 126,360.00 (270 * $520 *90%) (Nov-April)-6 Months 21060 Amount from the 2nd group 193,750.00 (310 * $625) (Dec-April)-5 Months 38750 Amount from the 3rd group 156,600.00 (270 * $580) (Jan-April)-4 Months 39150 Total 476,710.00