Chapter 3 - Chapter 3 Revenues are normally recognized when goods or services have been provided and payment or promise of payment has been received

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

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Chapter 3Revenues are normally recognized when goods or services have been provided and payment or promise of paymenthas been received. Expense recognition is guided by an attempt to match the costs associated with the generation ofthose 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 buildingfor which it has not yet been billed.b.At the beginning of January, Turner Construction Company pays $963 for magazine advertising to run inmonthly 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 fromDell’s standpoint.d.The University of Florida orders 70,000 season football tickets from its printer and pays $7,680 in advance forthe 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 isdue 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 priceof $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 commissionsrelated 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 $14,650cash payment is made on that day.j.Carousel Center Mall had janitorial supplies costing $4,200 in storage. An additional $2,900 worth of supplieswas 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 notuntil 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 onJanuary 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 Januarycalls. 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 servicesreceived 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 inDecember.
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