Assume Royal Palm Corp., an equipment distributor, sells a piece of machinery with a list price of $800,000 to Arch Inc. Arch Inc. will pay $850,000 in one year.

Royal Palm Corp. normally sells this type of equipment for 90% of list price.

How much should be recorded as revenue?

a. $720,000. b. $765,000. c. $800,000. d. $850,000.

a. $720,000

Explanation:

Since in the question, it is given that the equipment is sold at the list price

The list price is $800,000 and the selling percentage is 90%

So, the revenue should be recorded

= List price * selling percentage

= $800,000 * 90%

= $720,000

Simply we multiplied the list with the selling percentage so that the correct amount can come