Eugene Co has inventory it purchased for 6000 It sells the i

Eugene Co. has inventory it purchased for $6,000. It sells the inventory to a customer for $10,000, including installation. Installation sold separately costs $1,000 and the inventory sold separately costs $10,000. What amount of Sales Revenue is recognized by Eugene when delivery of the inventory has been made to the customer, but the installation has not been completed? Multiple Choice $10,000 $9,091 $9,000 $909

Solution

Answer is $ 9091 Explanation: Total sales revenue including installation 10000 (to be apportioned among product and installation cost on the basis of individual sales value) Individual sales value: Product 10,000 Installation cost 1,000 Total Individual sales 11,000 The sales of Product is only completed at the end of period. Therefore, the sales revenue has been recognized as under: Sales revenue to be recognized: 10000 /11000 *10000 = $9091