A is corrent. The requirement is to determine the amount that should be included in sales revenue. When the right of return exists, a seller may only recognize revenue when the buyer is obligated to pay the seller, and the obligation is not contingent on the resale of the product. Because Jensen’s obligation to repay is contingent upon Jensen reselling the goods, Jensen cannot recognize revenue in its December 31 income statement.
B is incorrect. When the right of return exists, a seller may only recognize revenue when the buyer is obligated to pay the seller, and the obligation is not contingent on the resale of the product. Because Jensen’s obligation to repay is contingent upon Jensen reselling the goods, Jensen cannot recognize revenue in its December 31 income statement.
C is incorrect. When the right of return exists, a seller may only recognize revenue when the buyer is obligated to pay the seller, and the obligation is not contingent on the resale of the product. Because Jensen’s obligation to repay is contingent upon Jensen reselling the goods, Jensen cannot recognize revenue in its December 31 income statement.
D is incorrect. When the right of return exists, a seller may only recognize revenue when the buyer is obligated to pay the seller, and the obligation is not contingent on the resale of the product. Because Jensen’s obligation to repay is contingent upon Jensen reselling the goods, Jensen cannot recognize revenue in its December 31 income statement.
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