FACH3 Homework - FACH3 Homework Questions 2 Deferred...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
FACH3 Homework Questions 2. Deferred revenue arises when payment is received prior to providing the service or delivering the goods. 3. Accrued revenue arises when services have been performed or goods have been delivered, but cash has not yet been collected. 4. Deferred expenses arise when cash is paid prior to receiving goods or services. 5. Accrued expenses arise when goods or services have been received, but cash has not yet been paid. 11. Amortization is the process of allocating the cost of a fixed asset that benefits more than one accounting period over the estimated useful life of the asset. 12. Amortization is necessary because the cost of the asset must be spread over the accounting periods during which the asset is used since it benefits more than one accounting period. It’s matching ! SE3-1 Salaries payable for Eve Company: [90,000 × (3 ÷ 10) + 5,000] = $32,000 SE3-6 Able Company: Adjustment for rent income Decrease revenue and record unearned revenue of $1,200 [= 4,800 × 3 ÷ 12]. The effect is an increase in liabilities and decrease in retained earnings. SE3-10 Paul Co.: Allocation of revenue between recognized and unearned Revenue Recognized Unearned Revenue at December 31 2008 0 $60,000 2009 $16,667 $43,333 2010 $20,000 $23,333 2011 $20,000 $ 3,333
Image of page 1

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

View Full Document Right Arrow Icon
Exercises E3-1 Thomas Toy Company: Amortization Amortization expense: $4,000 [= $24,000 ÷ 6 years]
Image of page 2
Image of page 3
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