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In the month of March the Chester Corporation received and delivered orders of 150,000 units at...

In the month of March the Chester Corporation received and delivered orders of 150,000 units at a price of $15.00 for revenue of $2.250mil for their product Cell. Chester uses the accrual method of accounting and offers 30 day credit terms. By the end of May Chester had collected payments of $2.250mil for the March deliveries. How much of the collected $2.250mil should Chester show on the March 31st income statement and how much on the May 31st income statement? Select: 1 $0 in March; $2.250mil in May $1.125mil in March; $1.125mil in May $2.250mil in March; $0 in May $0.743mil in March; $1.508mil in May

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Answer #1

Under accrual method of accounting, the income is shown in the period in which is is earned. Receipt of cash in not relevant

hence. whole of march revenues will be shown in in the income statement of march despite collection in May.

hence, the answer is

$2.250mil in March; $0 in May

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