Question

Revenues are normally recognized when goods or services have been provided and payment or promise of payment has been received. Expense recognition is guided by an attempt to match the costs associated with the generation of those revenues to the same time period. The following transactions occurred in January 2016:
a. McGraw-Hill Education uses $3,800 worth of electricity and natural gas in its headquarters building for which it has not yet been billed.
b. At the beginning of January, Turner Construction Company pays $963 for magazine advertising to run in monthly publications each of the first three months of the year.
c. Dell pays its computer service technicians $403,000 in salaries for the two weeks ended January 7. Answer from Dell’s standpoint.
d. The University of Florida orders 60,000 season football tickets from its printer and pays $8,340 in advance for the custom printing. The first game will be played in September. Answer from the university’s standpoint.
e. The campus bookstore receives 500 accounting texts at a cost of $95 each. The terms indicate that payment is due within 30 days of delivery.
f. During the last week of January, the campus bookstore sold 500 accounting texts received in (e) at a sales price of $130 each.
g. Fucillo Hyundai, Inc., pays its salespersons $13,800 in commissions related to December automobile sales. Answer from Fucillo’s standpoint.
h. On January 31, Fucillo Hyundai, Inc., determines that it will pay its salespersons $15,560 in commissions related to January sales. The payment will be made in early February. Answer from Fucillo’s standpoint.
i. A new grill is purchased and installed at a Wendy’s restaurant at the end of the day on January 31; a $12,750 cash payment is made on that day.
j. Carousel Center Mall had janitorial supplies costing $3,500 in storage. An additional $2,600 worth of supplies was purchased during January. At the end of January, $1,400 worth of janitorial supplies remained in storage.
k. An Iowa State University employee works eight hours, at $15 per hour, on January 31; however, pay-day is not until February 3. Answer from the university’s point of view.
l. Wang Company paid $4,800 for a fire insurance policy on January 1. The policy covers 12 months beginning on January 1. Answer from Wang’s point of view.
m. Derek Incorporated has its delivery van repaired in January for $600 and charges the amount on account.
n. Hass Company, a farm equipment company, receives its phone bill at the end of January for $154 for January calls. The bill has not been paid to date.
o. Martin Company receives and pays in January a $2,034 invoice (bill) from a consulting firm for services received in January. Answer from Martin’s standpoint.
p. Parillo’s Taxi Company pays a $595 invoice from a consulting firm for services received and recorded in December.
q. Phillips-Van Heusen Corporation, manufacturer of Izod, Arrow, Van Heusen, and Calvin Klein shirts, completes production of 450 men’s shirts ordered by Macy’s department stores at a cost of $10 each and delivers the order. Answer from Phillips-Van Heusen’s standpoint.

Required:
For each of the transactions, if an expense is to be recognized in January, indicate the expense account title and the amount. If an expense is not to be recognized in January, indicate why.



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  • CreatedJuly 01, 2014
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