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Estimating sales

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Company X is a software company that currently recognizes revenue when the agreement/contract is signed. Company X is considering a more conservative approach by recognizing revenue at the deliver of the product to customer. Therefore, it's considering changing its revenue recognition policy.

Days in receivable under current recognition policy (contract): 160
Days in receivable under new recognition policy (deliver): 120

Note: It is the intent of the problem to use both license and service revenue for calculating the adjusted sales in #1.

Estimate Company X's 1990 sales if revenue is recognized at delivery rather than when the contract is signed. Hint: use the estimate provided by the controller of the effect of recognizing revenue at delivery on days receivable.

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Solution Summary

The solution explains how to estimate sales given the receivables

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The sales in 1990 are $970,844.
Currently the revenue is accounted for on contract. Under the new policy the revenue would be accounted for on ...

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