Reference no: EM132961929
Revenues are normally recognized when goods or services have been provided and paymeny 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.
Assume that the following events and transaction occurred in January 2020:
a. A new grill is installed at a McDonald's restaurant. On the same day, payment of 14,000 is made in cash.
b. On January 1, 2020, Carousel Mall has Janitorial supplies costing $1000 in storage. An additional $600 worth of supplies is purchased during January. At the end of January, $900 worth of janitorial supplies remain in storage.
c. A Concordia University employee works eight hours, at $15 per hour, on January 31; however, payday is not until February 3. Answer from university's point of view.
d. Wang Company pays $3600 for fire insurance policy on January 2. The policy covers the current month and the next 11 months. Answer from Wang's point of view
e. Amber Incorporated has its delivery van repaired in January for $280 and charges the amount on account.
f. Ziegler Company, a farm equipment company, receives its phone bill at the end for $230 for January calls. The bill has not been paid to date.
g. Spina Company receives and pays in January a $2100 invoice from a consulting firm for services received in January.
h. Felicetti's Taxi Company pays $600 invoice from a consulting firm for services received and recorded in accounts payable in December.
i. Dell Technologies Inc. pays its computer service technicians $85,000 in salary for the two weeks ended in January. Answer from dell's standpoint.
j. Turner Construction Company pays $4500 in workers' compensation insurance for the first three months of the year.
k. McGraw-Hill Education uses $1200 worth of electricity and natural gas in its headquarters building for which it has not yet been billed.
l. Gildan Activewear Inc. completes production of 500 men's shirts ordered by Bon Ton Department Store at a cost of $9 each and delivers the order. Answer from Gildan's standpoint.
m. The campus bookstore receives 500 accounting textbooks at a cost of $70 each. The terms indicate that payment is due within 30 days of delivery.
n. During the last week of January, the campus bookstore sells 450 accounting textbooks received in (m) at a sale price of $100 each.
o. Sam Shell Dodge pays its salespeople $3500 in commissions related to December automobile sales. Answer from Sam Shell Dodge's standpoint.
p. On January 31, Sam shell Dodge determines that it will pay its salespeople $4200 in commission related to January sales. the payment will be made in early February. Answer from Sam Shell Dodge's standpoint.
Required:
Problem 1: For each of the January transactions, indicate the title and amount of the expense. If an expense is not to be recognized in September, explain why.