Question

The following economic events that were related to K&B Grocery Store occurred during 2011.
a. On February 7, K&B received a bill from Indianapolis Power and Light indicating that it had used electric power during January 2011 at a cost of $120; the bill need not be paid until February 25, 2011.
b. On February 15, K&B placed an order for a new cash register with NCR, for which $700 would be paid after delivery.
c. On February 21, the cash register ordered on February 15 was delivered. Payment was not due until March.
d. On February 22, the K&B store manager purchased a new passenger car for $15,000 in cash.
The car is entirely for personal use and was paid for from the manager’s personal assets.
e. On February 24, K&B signed a two-year extension of the lease on the store building occupied by the store. The new lease was effective on April 1, 2011, and required an increase in the monthly rental from $5,750 to $5,900.
f. On March 1, K&B paid $120 to Indianapolis Power and Light.
g. On March 5, K&B paid $5,750 to its landlord for March rent on the store building.
Required:
1. Using the words ‘‘qualify’’ and ‘‘does not qualify,’’ indicate whether each of the above events would qualify as a transaction and be recognized and recorded in the accounting system on the date indicated.
2. Conceptual Connection: For any events that did not qualify as a transaction to be recognized and recorded, explain why it does not qualify.


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  • CreatedSeptember 22, 2015
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