Calculating Monthly Income for Teal, Inc. from Prepaid Telephone Card Sales
How much income should Teal recognize in January, February, March, and April?
Indicate the income for each month based on the percentage of prepaid telephone cards sold and the commission paid to TeleExpress.
Answer:
Teal, Inc. recognizes income based on the percentage of prepaid telephone cards sold each month, considering the commission paid to TeleExpress. Let's calculate the income Teal should recognize in each month.
In January, Teal received prepaid telephone cards worth $4,400. Since none of the cards were sold in January, the income recognized for that month would be 0 dollars.
In February, Teal sold 50% of the cards received in January, which amounts to 0.5 * $4,400 = $2,200. Teal pays a 20% commission to TeleExpress, so the commission for February would be 0.2 * $2,200 = $440. Therefore, the income recognized in February would be the selling price minus the commission, which is $2,200 - $440 = $1,760.
Moving on to March, Teal sold 30% of the remaining cards from January, which is 0.3 * $4,400 = $1,320. Applying the 20% commission, the commission for March is 0.2 * $1,320 = $264. Hence, the income recognized in March would be $1,320 - $264 = $1,056.
In April, Teal sold 20% of the cards remaining from January, which amounts to 0.2 * $4,400 = $880. After deducting the 20% commission of 0.2 * $880 = $176, the income recognized in April would be $880 - $176 = $704.
To summarize:
- January income: $0
- February income: $1,760
- March income: $1,056
- April income: $704