d.) Today is December 31, 2008. On September 1, 2008 DALLAS paid $18,000 for one

Question

d.) Today is December 31, 2008. On September 1, 2008 DALLAS paid $18,000 for one-year of rent. The adjusting entry we must make on December 31 will result in what revenues and/or expenses for DALLAS? REVENUE = EXPENSE e.) Today is June 1,2009 Today DALLAS Inc. sold merchandise that it had purchased for $145,000 to customers for $221,000. Customers paid $76,000 in cash with the remainder on account, to be paid in two months. REVENUE EXPENSE = f.) Today is July 1, 2010 We purchased equipment today for $320,000. The equipment is expected to have a useful life of 10 years and no salvage value. REVENUE EXPENSE

Explanation / Answer

Question Answer Amount Explanation d Expense 6000 When paid whole amount of rent is not expensed, at year end period passed will trigger rent expense, here 4 months rent expense (Sep - Dec)= 18000* 4/12 e Both Revenue 221000 Amount of sale is recognised as revenue with correspoding cash receipt and accounts receivable. Expense 145000 Cost of goods sold is also recognised on sale as expense with corresponding reduction in inventory asset account. f No effect On acquisition asset is created, expense comes as time passes not today. a Both Revenue 6500 Amount of sale is recognised as revenue to the extent order fulfilled ( 11000-4500= 6500) with correspoding cash receipt Expense Cost of inventory sold Cost of goods sold is also recognised on sale as expense with corresponding reduction in inventory asset account. b No effect Revenue is recognised once subscription is delivered c Expense 340 Expense is recognised immediately, though the payment happens afterwards

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