Revenues are normally recognized when a company transfers promised goods or services to customers in the amount the company expects to be entitled to receive. Expense recognition is guided by an attempt to match the costs associated with the generation of those revenues to the same time period. Assume that the following transactions occurred in January: a. McGraw-Hill Education uses $2,759 worth of electricity and natural gas in its headquarters building for which it has not yet been billed. b. At the beginning of January, Turner Construction Company pays $984 for magazine advertising to run in monthly publications each of the first three months of the year. c. Dell pays its computer service technicians $392,500 in salaries for the two weeks ended January 7. Answer from Dell's standpoint. d. Iowa State University orders 73,000 football tickets from its printer and prepays $7,770 in advance for the custom printing. The first game will be played in September. Answer from the university's standpoint. e. The campus bookstore receives 620 accounting texts at a cost of $105 each. The terms indicate that payment is due within 30 days of delivery. f. During the last week of January, the campus bookstore sold 450 accounting texts received in (e) at a sales price of $130 each. g. Fucillo Automotive Group pays its salespersons $14,500 in commissions related to December automobile sales. Answer from Fucillo's standpoint. h. On January 31, Fucillo Automotive Group determines that it will pay its salespersons $76,280 in commissions related to January sales. The payment will be made in early February. Answer from Fucillo's standpoint. i. A new grill is received and installed at a Wendy's restaurant at the end of the day on January 31; a $14,050 cash payment is made on that day to the grill supply company. Answer from Wendy's standpoint. j. Mall of America (in Bloomington, MN) had janitorial supplies costing $5,300 in storage. An additional $3,400 worth of supplies was purchased during January. At the end of January, $1,590 worth of janitorial supplies remained in storage. k. An Emory State University employee works eight hours, at $25 per hour, on January 31; however, payday is not until February 3. Answer from the university's point of view. I. Wang Company paid $3,300 for a fire insurance policy on January 1. The policy covers 12 months beginning on January 1. Answer from Wang's point of view. m. Derek Incorporated has its delivery van repaired in January for $640 and charges the amount on account. n. Hass Company, a farm equipment company, receives its phone bill at the end of January for $332 for January calls. The bill has not been paid to date. o. Martin Company receives and pays in January a $1,295 invoice (bill) from a consulting firm for services received in January. Answer from Martin's standpoint. p. Parillo's Taxi Company pays a $715 invoice from a consulting firm for services received and recorded in December. q. PVH Corporation, manufacturer of IZOD, ARROW, Van Heusen, Calvin Klein, and Tommy Hilfiger apparel among other brands, completes production of 2,000 men's shirts ordered by Macy's department stores at a cost of $40 each and delivers the order in January. Answer from PVH Corporation's standpoint. Required: For each of the transactions, if an expense is to be recognized in January, indicate the expense account title and the amount. Note: If expense is not recognized choose "None". Amount of Expense Activity Expense Account Title Incurred in January a. Utilities expense b. Advertising expense C. Miscellaneous expenses d. Cost of goods sold e. Supplies expense f. Cost of goods sold g. h. Commission expense Commission expense i. Cost of goods sold j. Supplies expense k. Wages expense I. Insurance expense m. Repairs expense n. Utilities expense 0. Consulting expense p. Consulting expense q. Cost of goods sold

Revenues are normally recognized when a company transfers promised goods or services to customers in the amount the company expects to be entitled to receive. Expense recognition is guided by an attempt to match the costs associated with the generation of those revenues to the same time period. Assume that the following transactions occurred in January: a. McGraw-Hill Education uses $2,759 worth of electricity and natural gas in its headquarters building for which it has not yet been billed. b. At the beginning of January, Turner Construction Company pays $984 for magazine advertising to run in monthly publications each of the first three months of the year. c. Dell pays its computer service technicians $392,500 in salaries for the two weeks ended January 7. Answer from Dell's standpoint. d. Iowa State University orders 73,000 football tickets from its printer and prepays $7,770 in advance for the custom printing. The first game will be played in September. Answer from the university's standpoint. e. The campus bookstore receives 620 accounting texts at a cost of $105 each. The terms indicate that payment is due within 30 days of delivery. f. During the last week of January, the campus bookstore sold 450 accounting texts received in (e) at a sales price of $130 each. g. Fucillo Automotive Group pays its salespersons $14,500 in commissions related to December automobile sales. Answer from Fucillo's standpoint. h. On January 31, Fucillo Automotive Group determines that it will pay its salespersons $76,280 in commissions related to January sales. The payment will be made in early February. Answer from Fucillo's standpoint. i. A new grill is received and installed at a Wendy's restaurant at the end of the day on January 31; a $14,050 cash payment is made on that day to the grill supply company. Answer from Wendy's standpoint. j. Mall of America (in Bloomington, MN) had janitorial supplies costing $5,300 in storage. An additional $3,400 worth of supplies was purchased during January. At the end of January, $1,590 worth of janitorial supplies remained in storage. k. An Emory State University employee works eight hours, at $25 per hour, on January 31; however, payday is not until February 3. Answer from the university's point of view. I. Wang Company paid $3,300 for a fire insurance policy on January 1. The policy covers 12 months beginning on January 1. Answer from Wang's point of view. m. Derek Incorporated has its delivery van repaired in January for $640 and charges the amount on account. n. Hass Company, a farm equipment company, receives its phone bill at the end of January for $332 for January calls. The bill has not been paid to date. o. Martin Company receives and pays in January a $1,295 invoice (bill) from a consulting firm for services received in January. Answer from Martin's standpoint. p. Parillo's Taxi Company pays a $715 invoice from a consulting firm for services received and recorded in December. q. PVH Corporation, manufacturer of IZOD, ARROW, Van Heusen, Calvin Klein, and Tommy Hilfiger apparel among other brands, completes production of 2,000 men's shirts ordered by Macy's department stores at a cost of $40 each and delivers the order in January. Answer from PVH Corporation's standpoint. Required: For each of the transactions, if an expense is to be recognized in January, indicate the expense account title and the amount. Note: If expense is not recognized choose "None". Amount of Expense Activity Expense Account Title Incurred in January a. Utilities expense b. Advertising expense C. Miscellaneous expenses d. Cost of goods sold e. Supplies expense f. Cost of goods sold g. h. Commission expense Commission expense i. Cost of goods sold j. Supplies expense k. Wages expense I. Insurance expense m. Repairs expense n. Utilities expense 0. Consulting expense p. Consulting expense q. Cost of goods sold

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 2AIC

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