Walker company received a letter on Nov 31, 1997 indicating that Johnson, Inc would purchase a specialty machine priced at $4000K. On Feb 13 1998 a binding contract was executed for the machine’s construction. Materials costing $2000K were ordered in Decem 1997, arrived with an invoice in august 1998. and were used in the manfcturing process in the first quarter of 1999. after a labor dispute, walker finally completed manufacture and delivered the machine in dec 2000. Johnson received first invoice in 2001 and paid $4000K purchase price in 2001. Now walker conpany uses the matching concept walker should record the materials used to construct the machine as expenses in the year a)2001 b)1999 c)1998 d)2001 any idea of this?
wow. real conceptual question. this looks like uncertain so use the total completion. hence 2000 is what i’d say, cuz that’s when invoice happend and delivery happened. once you deliver something you can record revenue for it.
2000
well… the question was asking if the walker company use accrual concept but i know the answer for it (2000), so i just changed the question to matching concept, and i think the answer shouldnt be the same.