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Section_3_Assignment_Solution

Section_3_Assignment_Solution - Section 3 Assignment...

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Section 3 Assignment SOLUTION Part I: 1. Pirates Inc. had the following transactions occur: Jan 20: Performed services worth $4,000. Customer will pay for these services in February. Feb 18: The customer paid $4,000 to Pirates Inc. for services previously performed. A. If Pirates Inc. uses the cash basis of accounting, in which month will revenue be recognized? February – when the cash is received B. If Pirates Inc. uses the accrual basis of accounting, in which month will revenue be recognized? January – when the revenue is earned 2. Tarheels Inc. had the following transactions occur: June 30 Received $500 cash from a customer for services to be performed in August. Aug 15 Performed $500 worth of services for the above customer. A. If Tarheels Inc. uses the cash basis of accounting, in which month will revenue be recognized? June – when the cash is received B. If Tarheels Inc. uses the accrual basis of accounting, in which month will revenue be recognized? August – when the revenue is earned 3. Spartan Corp. had the following transaction occur: Sept 1: Purchased a six month car insurance policy costing $600. The policy period will begin on Sept 1. Sept 1 – Feb 27: The insurance policy expires over this time period. A. If Spartan Corp. uses the cash basis of accounting, in which month will insurance expense be recognized? September – when the cash is paid B. If Spartan Corp. uses the accrual basis of accounting, in which month(s) will insurance expense be recognized? Sept through February – as the insurance policy expires
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4. Wildcats Inc. had the following occur:
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