9232400_solution - Question 1 The following transactions...

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Question 1: The following transactions for Carleton Company occurred during January 2016: Jan. 1 Purchased a two-year insurance policy for cash, $8,400 4 Paid utilities bill received December 2015, $450 9 Performed a service on account, $1,200 16 Paid bimonthly salary to employees, $2,700 21 Received $800 from a customer on account 25 Received $600 from January 9 transaction 30 Prepared the adjusting entry for insurance from January 1 transaction 30 Accrued wages of $2,750 Required: Show the total amount of revenue and expense recognized under both the accrual basis and cash basis of accounting. Accrual Basis Revenue Total Expense Total Revenue -Accrual Basis Service 1,200 Total 1,200 Expense -Accrual Basis Insurance 350 Salary 2,700 Accrued wages 2,750 Total 5,800 Cash Basis
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Revenue Total Expense Total Revenue -Cash Basis Service 800 Service 600 Total 1,400 Expense -Cash Basis Insurance 8,400 Utilities 450 Salary 2,700 Total 11,550 Question 2: On December 15, 2015, a public company receives an order from a customer for services to be performed on December 28, 2015. Due to a backlog of orders, the company does not perform the services until January 3, 2016. The customer pays for the services on January 6, 2016. When should revenue be recorded for the company? Why (support your argument with a principle from the textbook)?
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  • Winter '15
  • Revenue, Expense, Generally Accepted Accounting Principles

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