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The Ford Motor Company $($NYSE: $F_{})$ is selling an electric version of its F$-150$ pickup truck, the F$-150$ Lightning electric truck. Ford cannot keep up with demand; it

has taken orders for its entire $2022$ production capacity and has closed orders for the $2022$ model. Ford has not yet begun taking reservations for the $2023$ model. The

F$-150$ Lightning order and sales process consists of the following steps:

The prospective buyer must first purchase a $$100$ refundable reservation that earns them the right to order a vehicle at a future unspecified date. The $$100$ is a

deposit on the future purchase.;

Ford then sends the reservation holder an invitation to place an order.

Ford sells the reservations and takes orders directly online, but the buyer must designate a local dealership to deliver the vehicle. In addition to the $$100$ refundable

reservation fee, assume that the customer must make a $$2,000$ deposit at the time of order and will pay for the vehicle upon delivery with cash, dealer financing, or a

combination of cash and financing.

View a quick tutorial video about revenue recognition at this

link $$

and then answer the following questions.

Questions

Will Ford recognize revenue for the $$100$ refundable reservation fee on the day that it receives the $$100?$ Explain.

When Ford receives a $$100$ reservation payment from a customer, what Ford general ledger accounts does this $$100$ impact? Explain.

Will Ford recognize revenue for the $$2,000$ deposit on the day that the order is placed? Explain.

Now assume that a customer purchases a reservation for an F$-150$ Lightning and receives an invitation to order. The customer then places an order and makes the

required deposit of $$2,000.$ How will this sales order and deposit directly impact Ford's balance sheet and income statement on the date of the order and deposit?

When the F$-150$ Lightning is delivered to the customer, assume that full payment for the vehicle is received in cash from the customer. How will Ford's balance

sheet and income statement be impacted at the point of delivery? $($Ignore dealership fees for this question.$)$

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