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Knowles Case: Cash vs Accrual Revenue Recognition

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Knowles Corporation uses the accrual basis of accounting. Knowles recognizes revenue at the time it delivers product or provides a service. The entity engages in the following activities during November:

Collects $10,000 from customers for the sale of merchandise in October.
Collects $18,000 from customers for the sale of merchandise in November.
Collects $12,000 from customers for the merchandise to be delivered in December and January.

Calculate the amount of revenue Knowles should recognize in November and calculate the amount of revenue Knowles should recognize in November if the company were on a cash basis.

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Solution Summary

Calculating the amount of revenue Knowles should recognize for the month of November and determination of the amount of revenue Knowles should recognize in November if the company were on a cash basis.

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