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Lewis Co. sold merchandise to AdCo for $60,000 and received $60,000 for that sale one month later. One week prior to receiving payment from AdCo, Lewis made a $10,000 payment to AdCo for advertising services that have a fair value of $7,500. After accounting for any necessary adjustments, how much revenue should Lewis Co. record for the merchandise sold to AdCo?

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abiolataiwo2015

Answer:

$57,500

Explanation:

Calculation to determine how much revenue should Lewis Co. record for the merchandise sold to AdCo

Using this formula

Revenue=Transactions price-(Payment to advertisement -Fair value)

Let plug in the formula

Revenue=$60,000-($10,000-$7,500)

Revenue=$60,000-$2,500

Revenue=$57,500

Therefore the amount of revenue that Lewis Co. should record for the merchandise sold to AdCo is $57,500

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