Question

Q2 Al LaMode Ice Cream Company produces high-quality ice cream that is distributed to shops in resort
areas. On July 1, the company purchased the raw materials to make the ice cream. On July 15, the
process was complete, and the product was stored in the freezer ready to ship to customers. On July
31, Ken and Mary's Ice Cream Shop ordered 200 pounds of ice cream. On August 1, Al LaMode
delivered the ice cream to Ken and Mary's Ice Cream Shop. Ken and Mary paid Al LaMode on
August 10. Ken and Mary sold all the ice cream between August 5 and August 12.
a. If it uses accrual-basis accounting, when will Al LaMode record the revenue from the sale to
Ken and Mary? Explain
b. If it uses cash-basis accounting, when will Al LaMode record the revenue from the sale to
Ken and Mary? Explain
c. Does cash basis of accounting violates GAAP? If yes, how?

Answer 1

Answer:

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Explanation:

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