Fundamentals Of Financial Accounting
6th Edition
ISBN: 9781259864230
Author: PHILLIPS, Fred, Libby, Robert, Patricia A.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 3, Problem 6E
Identifying Accrual Basis Expenses
Under accrual basis accounting, expenses are recognized when incurred, which means the activity giving rise to the expense has occurred. Assume the following transactions occurred in January:
- a. Dell paid its computer service technicians $90,000 in salary for work done in January. Answer from Dell’s standpoint.
- b. At the beginning of January, Turner Construction Company paid $3,000 in rent for February–April.
- c. McGraw-Hill Education—publisher of this textbook—used $3,000 worth of electricity and natural gas in January for which it has not yet been billed.
- d. Pooler Company received and paid in January a $1,500 invoice from a consulting firm for services received in January.
- e. The campus bookstore received consulting services at a cost of $5,000. The terms indicate that payment is due within 30 days of the consultation.
- f. Schergevitch Incorporated had its delivery van repaired in January for $280 and charged the amount on account.
Required:
For each of the transactions, if an expense is to be recognized in January, indicate the amount. If an expense is not to be recognized in January, indicate why.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Mr X enrolls in a 12-month customer service assistance program for a computer software from CYBER COMPANY costing P1,200 per month on August 1, 20x8. Given that the computer assistance occurs evenly throughout the year, CYBER COMPANY uses the “proportion of time” as its measure for membership revenue, what is the amount of sales revenue to be recognized on December 31?
Prepare the journal entries for the following transactions provided by MPM as at January 31, 2011 and post them to their respective general ledger accounts. a. Depreciation $100 b. Prepaid rent expired $400 c. Interest expense accrued $900 d. Employee salaries owed for Monday to Thursday for a five day workweek: weekly payroll $14,000
e. Unearned service revenue $800
Under accrual basis accounting, expenses are recognized when incurred, which means the activity giving rise to the expense has
occurred. Assume the following transactions occurred in January:
Required:
For each of the transactions, if an expense is to be recognized in January, indicate the amount.
Activity
a. Dugg paid its computer service technicians $105,500 in salary for work done
in January. Answer from Dugg's standpoint.
b. At the beginning of January, Turner Construction Company paid $10,800 in
rent for February-April.
c. McGraw-Hill Education-publisher of this textbook-used $7,450 worth of
electricity and natural gas in January, which it has not paid or recorded.
d. Pooler Company received and paid in January a $4,200 invoice from a
consulting firm for services received in January.
e. The campus bookstore received consulting services at a cost of $5,150. The
terms indicate that payment is due within 30 days of the consultation.
f. Schergevitch Incorporated had its delivery van…
Chapter 3 Solutions
Fundamentals Of Financial Accounting
Ch. 3 - Prob. 1QCh. 3 - When accounting was developed in the 14th and 15th...Ch. 3 - Define accrual basis accounting and contrast it...Ch. 3 - Prob. 4QCh. 3 - What two questions are answered by the core...Ch. 3 - Prob. 6QCh. 3 - What is a performance obligation?Ch. 3 - How do you report revenue from a contract that...Ch. 3 - Explain the expense recognition principle...Ch. 3 - Explain why stockholders equity is increased by...
Ch. 3 - Explain why revenues are recorded as credits and...Ch. 3 - Complete the following table by entering either...Ch. 3 - Complete the following table by entering either...Ch. 3 - Prob. 14QCh. 3 - Prob. 15QCh. 3 - What is the difference between Accounts Receivable...Ch. 3 - What is the difference between Accounts Payable...Ch. 3 - For each of the following situations, indicate...Ch. 3 - Prob. 19QCh. 3 - Which of the following items is not a specific...Ch. 3 - Which of the following accounts normally has a...Ch. 3 - Prob. 3MCCh. 3 - Which of the following would the core revenue...Ch. 3 - If a company incorrectly records a payment as an...Ch. 3 - Prob. 6MCCh. 3 - Prob. 7MCCh. 3 - Which account is least likely to be debited when...Ch. 3 - Webby Corporation reported the following amounts...Ch. 3 - Which of the following is the entry to be recorded...Ch. 3 - Identifying Performance Obligations Lakeside...Ch. 3 - Prob. 2MECh. 3 - Identifying Accrual Basis Revenues The following...Ch. 3 - Identifying Accrual Basis Expenses The following...Ch. 3 - Recording Accrual Basis Revenues For each of the...Ch. 3 - Recording Accrual Basis Expenses For each of the...Ch. 3 - Prob. 7MECh. 3 - Prob. 8MECh. 3 - Prob. 9MECh. 3 - Prob. 10MECh. 3 - Identifying Accrual Basis Expenses The following...Ch. 3 - Prob. 12MECh. 3 - Recording Accrual Basis Expenses For each of the...Ch. 3 - Prob. 14MECh. 3 - Preparing Accrual Basis Journal Entries for...Ch. 3 - Preparing Accrual Basis Journal Entries for...Ch. 3 - Preparing Accrual Basis Journal Entries and...Ch. 3 - Determining the Accounting Equation Effects of...Ch. 3 - Prob. 19MECh. 3 - Preparing an Income Statement and Calculating Net...Ch. 3 - Preparing Financial Statements from a Trial...Ch. 3 - Preparing an Income Statement and Calculating Net...Ch. 3 - Calculating and Interpreting Net Profit Margin...Ch. 3 - Calculating and Interpreting Net Profit Margin...Ch. 3 - Matching Definitions with Terms Match each...Ch. 3 - Matching Definitions with Terms Match each...Ch. 3 - Identifying Performance Obligations and Timing...Ch. 3 - Identifying Accrual Basis Revenues According to...Ch. 3 - Identifying Accrual Basis Revenues According to...Ch. 3 - Identifying Accrual Basis Expenses Under accrual...Ch. 3 - Identifying Accrual Basis Expenses Under accrual...Ch. 3 - Determining Accounting Equation Effects and Net...Ch. 3 - Determining Accounting Equation Effects and Net...Ch. 3 - Recording Journal Entries and Determining Net...Ch. 3 - Prob. 11ECh. 3 - Recording Journal Entries and Determining Net...Ch. 3 - Recording and Posting Accrual Basis Journal...Ch. 3 - Analyzing Transactions from the Perspectives of...Ch. 3 - Prob. 15ECh. 3 - Determining Accounting Equation Effects of Several...Ch. 3 - Preparing Journal Entries For each of the...Ch. 3 - Prob. 18ECh. 3 - Creating an Unadjusted Trial Balance Based on the...Ch. 3 - Inferring Transactions, Creating Financial...Ch. 3 - Determining the Effects of Various Transactions EZ...Ch. 3 - COACHED PROBLEMS Recording Nonquantitative Journal...Ch. 3 - Prob. 2CPCh. 3 - Prob. 3CPCh. 3 - Prob. 4CPCh. 3 - Prob. 1PACh. 3 - Recording Journal Entries Diana Mark is the...Ch. 3 - Analyzing the Effects of Transactions Using...Ch. 3 - Prob. 4PACh. 3 - Prob. 1PBCh. 3 - Prob. 2PBCh. 3 - Analyzing the Effects of Transactions Using...Ch. 3 - Analyzing, Journalizing, and Interpreting Business...Ch. 3 - Prob. 1COPCh. 3 - Finding Financial Information Refer to the...Ch. 3 - Comparing Financial Information Refer to the...Ch. 3 - Prob. 4SDCCh. 3 - Ethical Decision Making: A Mini-Case Mike Lynch is...Ch. 3 - Accounting for Business Operations Starting in...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- How much is the gross income of Mr. Ponce? Mr. Ponce is an employee of XYZ Trading. For the month of June, Ponce received the following from XYZ: Description Amount Basic salary Overtime and holiday pay Transportation and cellphone allowance Reimbursement of office supplies for XYZ Reimbursement of utilities payment for XYZ P25,000 2,500 4,000 2,000 4,000 P37,500 P33,500 O P31,500 O P27,500arrow_forwardUse the following information for Problems 30 and 31. On March 15, Calloway, Inc., paid property taxes of $480,000 for the calendar year. 30. How much of this expense should Calloway’s income statement reflect for the quarter ending March 31? a. –0– b. $40,000 c. $120,000 d. $480,000 31. The journal entry at March 15 to record the payment of property taxes would include which of the following? a. A debit to Property Tax Expense of $480,000 b. A credit to Cash of $120,000 c. A debit to Prepaid Property Taxes of $360,000 d. A credit to Prepaid Property Taxes of $40,000arrow_forwardSam formed a corporation called Sam Inc on December 1, 2010. The new corporation was able to begin operations immediately by purchasing all the assets and taking over the location of Buy-It, an equipment rental company which was going out of business. The corporation performs adjusting entries monthly. Closing entries are performed annually on December 31. During December, the corporation entered the following transactions: Dec. 1 Issued 20,000 shares of capital stock at an issue price of $15 per share. Dec. 2 Paid $158,000 cash and issued a 12 months note payable for the balance to buy equipment of $288,000 in which the note will be paid in full together with interest at the end of 1 year. Dec. 3 Paid quarterly rental of $4,800 per month in one lump sum to Lovely as three months' advance rent on the rental yard and office formerly occupied by Lovely. Dec. 7 Purchased office stationery from ICan Book Store for $1,200 on credit. Dec. 10 Polar Company paid $9600 in advance for equipment…arrow_forward
- Selected September T accounts for Kaufman Company follow in attached image. 1.In which of the accounts would a reversing entry be helpful? Why? 2.Prepare the appropriate reversing entry. 3.Prepare the journal entry to record a payment on October 25 for wages totaling $3,140. How much of this amount represents wages expense for October?arrow_forwardPrepare journal entries to record the following transactions that occurred in March: A. on first day of the month, purchased building for cash, $75,000 B. on fourth day of month, purchased inventory, on account, $6,875 C. on eleventh day of month, billed customer for services provided, $8,390 D. on nineteenth day of month, paid current month utility bill, $2,000 E. on last day of month, paid suppliers for previous purchases, $2,850arrow_forwardPrepare journal entries to record the following transactions for the month of November: A. on first day of the month, issued common stock for cash, $20,000 B. on third day of month, purchased equipment for cash, $10,500 C. on tenth day of month, received cash for accounting services, $14,250 D. on fifteenth day of month, paid miscellaneous expenses, $3,200 E. on last day of month, paid employee salaries, $8,600arrow_forward
- Assume you are a newly-hired accountant for a local manufacturing firm. You have enjoyed working for the company and are looking forward to your first experience participating in the preparation of the companys financial statements for the year-ending December 31, the end of the companys fiscal year. As you are preparing your assigned journal entries, your supervisor approaches you and asks to speak with you. Your supervisor is concerned because, based on her preliminary estimates, the company will fall just shy of its financial targets for the year. If the estimates are true, this means that all 176 employees of the company will not receive year-end bonuses, which represent a significant portion of their pay. One of the entries that you will prepare involves the upcoming bond interest payment that will be paid on January 15 of the next year. Your supervisor has calculated that, if the journal entry is dated on January 1 of the following year rather than on December 31 of the current year, the company will likely meet its financial goals thereby allowing all employees to receive year-end bonuses. Your supervisor asks you if you will consider dating the journal entry on January 1 instead of December 31 of the current year. Assess the implications of the various stake holders and explain what your answer will be.arrow_forwardThe Income Statement columns of the August 31 (year-end) work sheet for Ralley Company are shown here. From the information given, prepare an income statement for the company. To save time and space, the expenses have been grouped together into two categories.arrow_forwardReview the following transactions and prepare any necessary journal entries for Woodworking Magazine. Woodworking Magazine provides one issue per month to subscribers for a service fee of $240 per year. Assume January 1 is the first day of operations for this company, and no new customers join during the year. A. On January 1, Woodworking Magazine receives advance cash payment from forty customers for magazine subscription services. Handyman had yet to provide subscription services as of January 1. B. On April 30, Woodworking recognizes subscription revenues earned. C. On October 31, Woodworking recognizes subscription revenues earned. D. On December 31, Woodworking recognizes subscription revenues earned.arrow_forward
- On September 30, Cody Companys selected account balances are as follows: In general journal form, prepare the entries to record the following: Oct. 15Payment of liabilities for FICA taxes and the federal income tax. 31Payment of liability for state unemployment tax. 31Payment of liability for federal unemployment tax.arrow_forwardA business provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year’s vacation pay is $43,200. Required: A. Journalize the adjusting entry required on January 31, the end of the first month of the current year, to record the accrued vacation pay. Refer to the Chart of Accounts for exact wording of account titles. B. How is the vacation pay reported on the company’s balance sheet? When is this amount removed from the company’s balance sheet? CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Accounts Receivable 112 Interest Receivable 113 Notes Receivable 115 Merchandise Inventory 116 Supplies 118 Prepaid Insurance 120 Land 123 Building 124 Accumulated Depreciation-Building 125 Office Equipment 126 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 213 Interest Payable 214 Notes Payable 215…arrow_forwardA business provides its employees with varying amounts of vacation per year, depending on the length of employment. The estimated amount of the current year’s vacation pay is $43,200. Required: a. Journalize the adjusting entry required on January 31, the end of the first month of the current year, to record the accrued vacation pay. Refer to the Chart of Accounts for exact wording of account titles. b. How is the vacation pay reported on the company’s balance sheet? When is this amount removed from the company’s balance sheet? Final Question: How is the vacation pay reported on the company’s balance sheet? ___________________________ , unless employees are allowed to accumulate their vacation pay for use in future years. When is this amount removed from the company’s balance sheet? ____________________________________arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCentury 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
- College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College PubCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781305084087Author:Cathy J. ScottPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781305084087
Author:Cathy J. Scott
Publisher:Cengage Learning
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY