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of credit, the customer paid Eagle 3 to 10 days after delivery.
Eagle promptly notified Timberline to send an invoice, which
Eagle paid on receipt.
Some of Eagle's customers paid cash. Those customers paid
Eagle 15 days before delivery. Timberline then sent a bill to
Eagle which Eagle paid on receipt.
Timberline usually sold house kits to Eagle at the price in
effect when Eagle placed the order. Eagle lost money on some
house contracts each year because Timberline's price was not
fixed until Timberline billed Eagle around the time of delivery.
Timberline bought commodities such as lumber and plywood products
to use in the kits. Timberline sometimes changed the prices it
charged Eagle to offset increases in the prices of commodities it
used.
Timberline shipped the house kits to Eagle's customers.
Eagle billed its customers for the shipping costs.
5. Eagle's Accounting Method
a. Accrual Method
Eagle consistently used the accrual method of accounting for
financial and tax purposes.
b. 1990 Study
Eagle's accountant, William E. Gross (Gross), analyzed
Eagle's experience with customer deposits. Gross counted how
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Last modified: May 25, 2011