Question

For each of the following transactions, indicate the point at which (1) the initial transaction is recognized and (2) the financial statement element is realized:
1. Inventory is purchased on credit on 1 August and is received on 14 August. It is paid for on 12 September.
2. A customer buys a product on credit on 13 November and takes immediate delivery, promising to pay on 1 February of the following year.
3. Expected warranty claims on products sold are accrued as the sales are made. Warranty claims are made at the end of the subsequent fiscal year. A cash payment is made to the customer at the beginning of the year following the claim.
4. A customer orders a custom- built machine and pays when the order is placed on 20 February. The machine is delivered on 10 March.
5. The company uses a substantial amount of electricity. The electric utility issues bimonthly bills (i. e., one every two months) three weeks following the two- month usage period.
6. A sale on credit is completed on January 20; the product is delivered on 1 February. Payment is received on 1 March.



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  • CreatedFebruary 17, 2015
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