Financial Accounting
9th Edition
ISBN: 9781259222139
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 3, Problem 3.3E
Identifying Revenues
Revenues are normally recognized when the company transfers promised goods or services in the amount the company expects to receive. The amount recorded is the cash-equivalent sales price. The following transactions occurred in September:
- a. A popular ski magazine company receives a total of $12,345 today from subscribers. The subscriptions begin in the next fiscal year. Answer from the magazine company's standpoint.
- b. On September I of the current year, a bank lends $1,500 to a company; the note principal and $150 ($1,500 × 10 percent) annual interest are due in one year. Answer from the bank’s standpoint.
- c. Fucillo Automotive Group (offering a wide variety of car and truck brands) sells a Ford F-150 truck with a list, or “sticker.” price of $48,050 for $46,500 cash.
- d. Macy’s department store orders 1,000 men’s shirts for $15 each for future delivery from PYH Corp., manufacturer of IZOD, ARROW, Van Heusen, Calvin Klein, and Tommy Hilfiger apparel. The terms require payment in full within 30 days of delivery. Answer from PVH Corp.’s standpoint.
- e. PVH Corp. completes production of the shirts described in (d) and delivers the order. Answer from PVH’s standpoint.
- f. PVH Corp. receives payment from Macy’s for the events described in (d) and (e). Answer from PVH’s standpoint.
- g. A customer purchases a ticket from American Airlines for $780 cash to travel the following January. Answer from American Airlines’s standpoint.
- h. Ford Motor Company issues SI5 million in new common stock.
- i. Michigan State University receives $19,500,000 cash for 80,000 five-game season football tickets.
- j. Michigan State plays the first football game referred to in (i).
- k. Precision Builders signs a contract with a customer for the construction of a new SI.500.000 warehouse. At the signing. Precision receives a check for $200,000 as a deposit on the future construction. Answer from Precision’s standpoint.
- l. A customer orders and receives 10 personal computers from Dell: the customer promises to pay $9,600 within three months. Answer from Dell's standpoint.
- m. Sears, a retail store, sells a $300 lamp to a customer who charges the sale on his Sear's credit card. Answer from Sears’s standpoint.
Required:
For each of the transactions, if revenue is to be recognized in September, indicate the revenue account title and amount. If revenue is not to be recognized in September, explain why.
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Luna Company accepted credit cards in payment for $7,100 of services performed during July Year 1. The credit card company charged
Luna a 1.50 percent service fee; it paid Luna as soon as it received the invoices.
Required
a. Prepare the general journal entry to record the service revenue.
b. Prepare the general journal entry for the collection of the receivable from the credit card company.
c. Based on this information alone, what is the amount of net income earned during the month of July?
Complete this question by entering your answers in the tabs below.
Required A Required B
Required C
Prepare the general journal entry to record the service revenue. (If no entry is required for a transaction/event, select "No journal entry
required" in the first account field. Round your answers to nearest whole dollar.)
View transaction list
Journal entry worksheet
<
A
Record service revenue on credit card payment and credit card expenses.
Note: Enter debits before credits.
Transaction
1
General…
In providing accounting services to small businesses, you encounter the following situations.
1.
Grainger Corporation rings up cash sales and sales taxes separately on its cash register. On April 10, the register totals are pre-tax sales of sales $5,200 plus GST of $300 and PST of $400.
2.
Darby Corporation receives its annual property tax bill in the amount of $8,100 on May 31.
3.
(i) During the month of March, Neufeld Corporation’s employees earned gross salaries of $60,400. Withholdings deducted from employee earnings related to these salaries were $2,950 for CPP, $1,068 for EI, $7,780 for income taxes, and $370 for union dues. (ii) Neufeld’s payroll costs for the week were $2,950 for CPP and $1,495 for EI.
Prepare the journal entries to record the above transactions. (Round answers to 0 decimal places, e.g. 5,275.)
Sr no.
Account Titles and Explanation
Debit
Credit
1.
2.
3…
On December 1, Williams Company borrowed $50,000 cash from Second National Bank by signing a 90-day, 5% note payable.
a. Prepare Williams' journal entry to record the issuance of the note payable.
b. Prepare Williams' journal entry to record the accrued interest due at December 31.
C. Prepare Williams' journal entry to record the payment of the note on March 1 of the next year.
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Chapter 3 Solutions
Financial Accounting
Ch. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Write the income statement equation and define...Ch. 3 - Explain the difference between a. Revenues and...Ch. 3 - Define accrual accounting and contrast it with...Ch. 3 - Prob. 6QCh. 3 - Explain the expense recognition principle.Ch. 3 - Explain why stockholders equity is increased by...Ch. 3 - Explain why revenues are recorded as credits and...Ch. 3 - Complete the following matrix by entering either...
Ch. 3 - Complete the following matrix by entering either...Ch. 3 - Prob. 12QCh. 3 - State the equation for the net profit margin ratio...Ch. 3 - Which of the following is not a specific account...Ch. 3 - Which of the following is not one of the criteria...Ch. 3 - The expense recognition principle controls a....Ch. 3 - Prob. 4MCQCh. 3 - Prob. 5MCQCh. 3 - Prob. 6MCQCh. 3 - Prob. 7MCQCh. 3 - Prob. 8MCQCh. 3 - Prob. 9MCQCh. 3 - Prob. 10MCQCh. 3 - Prob. 3.1MECh. 3 - Reporting Cash Basis versus Accrual Basis Income...Ch. 3 - Identifying Revenues The following transactions...Ch. 3 - Identifying Expenses The following transactions...Ch. 3 - Prob. 3.5MECh. 3 - Prob. 3.6MECh. 3 - Determining the Financial Statement Effects of...Ch. 3 - Prob. 3.8MECh. 3 - Prob. 3.9MECh. 3 - Identifying the Operating Activities in a...Ch. 3 - Prob. 3.11MECh. 3 - Prob. 3.1ECh. 3 - Reporting Cash Basis versus Accrual Basis Income...Ch. 3 - Identifying Revenues Revenues are normally...Ch. 3 - Identifying Expenses Revenues are normally...Ch. 3 - Prob. 3.5ECh. 3 - Determining Financial Statement Effects of Various...Ch. 3 - Recording Journal Entries Sysco, formed in 1969,...Ch. 3 - Prob. 3.8ECh. 3 - Prob. 3.9ECh. 3 - Analyzing the Effects of Transactions in...Ch. 3 - Preparing an Income Statement Refer to E3-10....Ch. 3 - Prob. 3.12ECh. 3 - Analyzing the Effects of Transactions in...Ch. 3 - Prob. 3.14ECh. 3 - Prob. 3.15ECh. 3 - Prob. 3.16ECh. 3 - Prob. 3.17ECh. 3 - Prob. 3.18ECh. 3 - Prob. 3.19ECh. 3 - Prob. 3.20ECh. 3 - Prob. 3.1PCh. 3 - Recording Journal Entries (AP3-2) Ryan Terlecki...Ch. 3 - Prob. 3.3PCh. 3 - Prob. 3.4PCh. 3 - Prob. 3.5PCh. 3 - Prob. 3.6PCh. 3 - Prob. 3.7PCh. 3 - Recording Nonquantitative Journal Entries (P3-1)...Ch. 3 - Prob. 3.2APCh. 3 - Prob. 3.3APCh. 3 - Prob. 3.4APCh. 3 - Prob. 3.5APCh. 3 - Prob. 3.6APCh. 3 - Accounting for Operating Activities in a New...Ch. 3 - Finding Financial Information Refer to the...Ch. 3 - Finding Financial Information Refer to the...Ch. 3 - Comparing Companies within an Industry Refer to...Ch. 3 - Analyzing a Company over Time Refer to the annual...Ch. 3 - Prob. 3.6CPCh. 3 - Evaluating an Ethical Dilemma Mike Lynch is the...
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