fin621
a. How much revenue should Apex report on its Income Statement of 2011? Also give the reason.
Ans:
The income of the Apex consignment is 500,000. Apex consignment is a middle man who receives the commission from the seller by selling their items. In consignment, all expense born by the middle man is on behalf by the seller, which is why Apex consignment's income for the year 2011 is 500,000. Whereas the question of cost of goods sold, it's from the side of manufacturing concern and Apex consignment is not a manufacturing concern. So the report of income statement of the Apex consignment will be 500,000.
b. Do you agree with the statement of Apex about net income? Justify your answer.
Ans:
Yes, I agree about the Apex consignment's income statement because Apex consignment is playing his role as a mediatory but not all control on the goods. Apex consignment will only receive the commission on their sold items. Apex consignment has no any type of expenses because in the Scenario there is not mentioned that the Apex consignment pays the expenses. According to the consignment rule, all expenses pay the seller of the goods but not the consignee. So the provider of the goods will pay the expenses to the Apex consignment because Apex consignment has paid total expenses himself. There is also not mentioned that the expenses which pays the Apex consignment is included in the commission, that is why I am agree of the income statement of the Apex consignment.
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