ldentifying Expenses Revenues are normally w in the amount the company to costs

Question

ldentifying Expenses Revenues are normally w in the amount the company to costs associated with the generaoxn ions occurred in January: recognized when a company transfers promised goods or services to customers expects to receive. Expense recognition is guided by an attempt to match the neration of those revenues to the same time period. The following transac- Hill Education uses $3,800 worth of electricity and natural gas in its headquarters building McGraw for which it has not yet been billed. h Al the begining of January, Turner Construction Company pays $963 for magazine advertising to n in monthly publications each of the first three months of the year Dell pays its computer service technicians S403,000 in salaries for the two weeks ended January 7. Answer from Dell's standpoint. The University of Florida orders 60,000 season football tickets from its printer and pays $8,340 in advance for the custom printing. The first game will be played in September. Answer from the univer- sity's standpoint. The campus bookstore receives 500 accounting texts at a cost of $160 each. The terms indicate that payment is due within 30 days of delivery, e. . During the last week of January, the campus bookstore sold 500 accounting texts received in (e) ata g. Fucillo Automotive Group pays its salespersons $13,800 in commissions related to December auto- h. On January 31, Fucillo Automotive Group determines that it will pay its salespersons $15,560 in com- sales price of $230 each. mobile sales. Answer from Fucillo's standpoint. missions related 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 $12,750 cash payment is made on that day. j. Destiny USA (formerly Carousel Mall in Syracuse, NY) had janitorial supplies costing $3,500 in storage. An additional $2,600 worth of supplies was purchased during January. At the end of January $1,400 worth of janitorial supplies remained in storage k. An Iowa State University employee works eight hours, at S15 per hour, on January 31; however, L Wang Company paid $4,800 for a fire insurance policy on January 1. The policy covers 12 months m. Derek Incorporated has its delivery van repaired in January for $600 and charges the amount on payday is not until February 3. Answer from the university's point of view beginning on January 1. Answer from Wang's point of view n. Hass Company, a farm eq o. Martin Company p. Parillo's Taxi Company pays a $$95 invoice from a consulting PVH Cor poduction of 450 men's shirts ordered by Macy's department stores at a cost of January calls. The bill has not been paid to date. vices received in January. Answer from Martin's standpoint. in December. uipment company, receives its phone bill at the end of January for $154 for receives and pays in January a $2,034 invoice (bill) from a consulting firm for ser- firm for services received and recorded ufacturer of IZOD, ARROW, Van Heusen, Calvin Klein, and Tommy Hilfiger apparel, completes $10 each and delivers the order. Answer from PVH Corp.'s standpoint. Required For each of the transactions, if an expense is to be recognized in January, indicate the be recognized in January, indicate title and the amount. If an expense is not to

Explanation / Answer

Requirement Name of party Revenue/Expense Account title Whether Revenue / expense to be recognized in January Amount to be recognized in January Reason for Yes or No a Mcgrow Hill Education Utilities Expense Yes 3800 Expenses has been accrued in January b Turner Construction Company Advertising expense Yes, Partly 321 $963 has been paid for first three months which include January c Dell Salaries expense Yes, Partly 201500 The amount has been paid for last week of December and first week of January. So January week has to be recognized. d University of Florida           - NO, Since, only advance is paid for printing of football tickets. And The game is starting in September e The Campus Bookstore Inventory Purchase Yes 80000 It has to be accounted when delivery is taken regardless of payment to be made at later stage f The Campus Bookstore Sales Yes 115000 Since Sale has taken place in January itself g Fucillo Automative Group           - NO, Since the payment related to accrued expenses of December h Fucillo Automative Group Sales Commissions Yes 15560 Since the expense has accrued in January, it has to be recognized in January regardless of payment in February i Wendy's Restaurant Equipment (Capital expenditure) Yes 12750 Since Purchase, installation and use of machinery started in January itself. j Destiny USA Supplies expense Yes 4700 =Beginning Balance+purchases-ending Balance k An Iowa State University Salaries & Wages expenses Yes 120 Since salaries has accrued in January itself, it has to be recognized regardless of Payment l Wang Company Insurance expenses Yes, partly 400 Its prepaid for 12 months which include January also. So, except for January, insurance belonging to other 11 months($4400) will remain in prepaid insurance. m Derek Incorporated Repair expense Yes 600 since repair activity has happened in January, it has to be recognized January regardless of whether payment has been made or not n Hass Company Telephone bills Yes 154 Since, calls are made in January, it has to be recognized in January regardless of payment. o Martin Company Consulting expenses Yes 2034 Since expense has accrued in January, it has to be recognized in the same month p Parillo's Texi Company           - NO, Since the payment related to accrued expenses of December q PVH Corp. Sales Yes 4500 Since Sale has taken place in January itself

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