Chapter 3 - Chapter 3 Revenues are normally recognized when...

Info icon This preview shows pages 1–2. Sign up to view the full content.

Chapter 3 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. The McGraw-Hill Companies, Inc., uses $2,769 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 $393,500 in salaries for the two weeks ended January 7. Answer from Dell’s standpoint. d. The University of Florida orders 70,000 season football tickets from its printer and pays $7,680 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 780 accounting texts at a cost of $98 each. The terms indicate that payment is due within 30 days of delivery. f. During the last week of January, the campus bookstore sold 580 accounting texts received in ( e ) at a sales price of $130 each. g. Fucillo Hyundai, Inc., pays its salespersons $13,900 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 $14,900 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 $14,650 cash payment is made on that day. j. Carousel Center Mall had janitorial supplies costing $4,200 in storage. An additional $2,900 worth of supplies was purchased during January. At the end of January, $1,540 worth of janitorial supplies remained in storage. k. An Iowa State University employee works eight hours, at $18 per hour, on January 31; however, payday is not until February 3. Answer from the university’s point of view. l. Wang Company paid $3,000 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 $580 and charges the amount on account. n. Haas Company, a farm equipment company, receives its phone bill at the end of January for $232 for January calls. The bill has not been paid to date. o. Martin Company receives and pays in January a $1,445 invoice (bill) from a consulting firm for services received in January. Answer from Martin’s Standpoint. p. Parillo’s Taxi Company pays a $685 invoice from a consulting firm for services received and recorded in December.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern