Revenue Recognition Journal Entries

Orders in Blue Onion are first recorded as Deferred Revenue when they are placed. In its simplest form, this means that a customer has placed the order but the company has yet to fulfill it so revenue cannot be recognized and the order remains a balance sheet liability.

Upon fulfillment, the order is considered to have met its performance obligations and becomes recognizable revenue under ASC 606. Blue Onion provides the following journal entries:

Debit entry for the reversal of the deferred revenue.
Credit entry to the revenue accounts, broken out into gross sales, shipping revenue, and discounts.
- When items in an order are shipped on different dates, revenue for each item is recorded at its corresponding shipment date.
- Shipping revenue for the full order is recognized at the time of the first shipment.

For a view of your fulfillment of orders over time, we recommend reviewing the Deferred Revenue page.

Blue Onion identifies Complimentary Orders in the Revenue Recognition section to assist in identifying revenue and discounts that you may want to reclassify.

Complimentary orders are defined as orders that are 100% discounted.
The entry under this section is removing complimentary orders that were included in recognized revenue out of revenue and discounts.
If you take the order out of revenue and discounts, don't forget the other side of the entry to reduce inventory and book into the relevant expense account.