6-42 - I:6-42 Timing of Expense Recognition. Solutions...

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I:6-42 Timing of Expense Recognition. Solutions Corporation, a computer vendor and consulting company, uses the accrual method of accounting. Its tax year is the calendar year. The following are three of the corporation’s transactions during the current year: 1. Solutions Corporation hired a contractor to remodel its sales floor. The contractor completed the remodeling on November 30. On December 15, Solutions received a $21,000 bill from the contractor. Solutions immediately contacted the contractor to contest the $8,000 labor charge included in the total bill, which Solutions claims should only be $7,000. Solutions made no payment on the bill. 2. Solutions offers a 2-year warranty on all of its computer systems. For sales of computers in the current year, it paid $11,500 to service warranties during the current tax year, and it expects to pay $12,000 to fulfill the remaining warranty obligations next year. 3. Every year, Solutions offers a series of six trade seminars from November 1 through March 31. It receives all registration fees from participants by October 1, before the seminars begin. As of December 31, two of the six seminars are completed, and the next seminar is
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This note was uploaded on 04/17/2011 for the course ACCOUNTING 490 taught by Professor Santos during the Spring '11 term at University of Phoenix.

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6-42 - I:6-42 Timing of Expense Recognition. Solutions...

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