Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 3.4CP
To determine
The revenue recognition principle:
The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation (sales or services) of the company is completed.
To prepare: A memorandum, and explain recognition of revenue from ticket sales.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Hawaiian Corporate Holidays arranges events for large corporations and trusts. It books hotel rooms, airline tickets, transportation and any other venues a company requests. It normally bills the companies ahead of the event, recording the invoice as unearned revenue. Once the event is complete, an entry is made to reclassify the amount from unearned revenues to Airline Sales or Event Sales.
Record the following transactions in the general journal using the account names shown in the Chart of Accounts (page 3). Skip a line between each entry. You do not need to include explanations.
Do not input general ledger account numbers in the Post Ref column of the journal until you post the journal entry to the ledger.
Mar 1 You have recently formed a corporation called Hawaiian Corporate Holidays (HCH). You invest $40,000 in a checking account in the company’s name at Bank of Hawaii. Since the company is a corporation, it issues you 8,000 shares of $5 par value common stock in…
Westover Travel offers travel packages using both air and ocean travel. Westover offers two packages, Tourist and Premier, that differ
in the accommodations, class of travel, and so on. Westover has a call center, which handles customer queries and complaints. The
call center tracks the number of calls and the number of call-minutes for customers by the package they have purchased. Expected
call center data for next month follow.
Call center volume:
Number of calls
Number of call minutes
Call center costs:
Call-related
Call minute-related
Total call center costs
Tourist
29,000
126,000
Required:
Total
$ 222,950
106,920
$ 329,870
The call center at Westover uses a two-stage cost allocation system: It uses the number of calls to allocate call-related costs and the
number of call minutes to allocate call minute-related costs.
Premier
16,500
198,000
a. Call related-overhead rate
b. Call minute-related overhead rate
c. Call center costs allocated to Tourist
d. Call center costs allocated to…
draw the system flow chart for the following narrative?
Cornick, Inc. sells office products to businesses in the eastern region of the United States. Each month, the IT division at Cornick prints monthly statements and sends them to the accounts receivable (AR) department, where a clerk mails them to the customers. Cornick’s custo- mers mail their payments back to Cornick, where a clerk in AR batches the checks and sends them to the cashier. The AR clerk then uses the payment stub to enter the payments into the computer, where the AR master data are updated to record the payment
Chapter 3 Solutions
Accounting
Ch. 3 - How are revenues and expenses reported on the...Ch. 3 - Is the matching concept related to (a) the cash...Ch. 3 - Why are adjusting entries needed at the end of an...Ch. 3 - What is the difference between adjusting entries...Ch. 3 - Identify the four different categories of...Ch. 3 - If the effect of the debit portion of an adjusting...Ch. 3 - If the effect of the credit portion of an...Ch. 3 - Does every adjusting entry affect net income for...Ch. 3 - Prob. 9DQCh. 3 - (a) Explain the purpose of the two accounts:...
Ch. 3 - Accounts requiring adjustment Indicate with a Yes...Ch. 3 - Accounts requiring adjustment Indicate with a Yes...Ch. 3 - Prob. 3.2APECh. 3 - Type of adjustment Classify the following items as...Ch. 3 - Adjustment for accrued revenues At the end of the...Ch. 3 - Adjustment for accrued expense Prospect Realty Co....Ch. 3 - Adjustment for accrued expense We-Sell Realty Co....Ch. 3 - Adjustment for unearned revenue On June 1, 2019,...Ch. 3 - Adjustment for unearned revenue The balance in the...Ch. 3 - Adjustment for prepaid expense The prepaid...Ch. 3 - Adjustment for prepaid expense The supplies...Ch. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Effect of omitting adjustments For the year ending...Ch. 3 - Effect of omitting adjustments For the year ending...Ch. 3 - Effect of errors on adjusted trial balance For...Ch. 3 - Effect of errors on adjusted trial balance For...Ch. 3 - Vertical analysis Two income statements for...Ch. 3 - Vertical analysis Two income statements for Cornea...Ch. 3 - Classifying types of adjustments Classify the...Ch. 3 - Classifying adjusting entries The following...Ch. 3 - Adjusting entry for accrued fees At the end of the...Ch. 3 - Effect of omitting adjusting entry The adjusting...Ch. 3 - Adjusting entries for accrued salaries Garcia...Ch. 3 - Determining wages paid The wages payable and wages...Ch. 3 - Effect of omitting adjusting entry Accrued...Ch. 3 - Effect of omitting adjusting entry When preparing...Ch. 3 - Adjusting entries for unearned fees The balance in...Ch. 3 - Effect of omitting adjusting entry At the end of...Ch. 3 - Adjusting entry for supplies The balance in the...Ch. 3 - Determining supplies purchased The supplies and...Ch. 3 - Effect of omitting adjusting entry At August 31,...Ch. 3 - Adjusting entries for prepaid insurance The...Ch. 3 - Adjusting entries for prepaid insurance The...Ch. 3 - Adjusting entries for unearned and accrued fees...Ch. 3 - Adjusting entries for prepaid and accrued taxes...Ch. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Determining fixed asset's book value The balance...Ch. 3 - Book value of fixed assets In a recent balance...Ch. 3 - Effects of errors on financial statements For a...Ch. 3 - Effects of errors on financial statements For a...Ch. 3 - Effects of errors on financial statements The...Ch. 3 - Effects of errors on financial statements If the...Ch. 3 - Adjusting entries for depreciation; effect of...Ch. 3 - Adjusting entries from trial balances The...Ch. 3 - Adjusting entries from trial balances The...Ch. 3 - Prob. 3.28EXCh. 3 - Prob. 3.29EXCh. 3 - Prob. 3.30EXCh. 3 - Adjusting entries On December 31, the following...Ch. 3 - Prob. 3.2APRCh. 3 - Adjusting entries Milbank Repairs Service, an...Ch. 3 - Adjusting entries Good Note Company specializes in...Ch. 3 - Adjusting entries and adjusted trial balances...Ch. 3 - Adjusting entries and errors At the end of April,...Ch. 3 - Adjusting entries On May 31, the following data...Ch. 3 - Prob. 3.2BPRCh. 3 - Adjusting entries Crazy Mountain Outfitters Co.,...Ch. 3 - Adjusting entries The Signage Company specializes...Ch. 3 - Adjusting entries and adjusted trial balances...Ch. 3 - Prob. 3.6BPRCh. 3 - The unadjusted trial balance that you prepared for...Ch. 3 - Prob. 3.1CPCh. 3 - Ethics in Action Daryl Kirby opened Squid Realty...Ch. 3 - Prob. 3.4CPCh. 3 - Prob. 3.5CP
Knowledge Booster
Similar questions
- According to your studying of the Conceptual Framework, Discuss the following: 1. Selane Eatery operates a catering service specializing in business luncheons for large companies. Selane requires customers to place their orders 2 weeks in advance of the scheduled events. Selane bills its customers on the tenth day of the month following the date of service and requires that payment be made within 30 days of the billing date. Conceptually, when should Selane recognize revenue related to its catering service? 2. Mogilny Company paid $135,000 for a machine. The Accumulated Depreciation account has a balance of $46,500 at the present time. The company could sell the machine today for $150,000. The company president believes that the company has a “right to this gain.” What does the president mean by this statement? Do you agree? 3. Three expense recognition methods (associating cause and effect, systematic and rational allocation, and immediate recognition) were discussed in the chapter…arrow_forwardMiss Angela recently joined A2A Limited as an accounting clerk. As a part of the financial reporting process, she receives the following source documents to prepare journal vouchers for general ledger entries. purchase orders, sales invoices, and vendor invoices Angela posts the journal vouchers to the general ledger and the related subsidiary ledgers at the end of each day. Each month the clerk reconciles the subsidiary accounts to their control accounts in the general ledger to ensure that they balance. Required: Discuss any control weaknesses and risks associated with the accounting information system of A2A Limited.arrow_forwardMiss Anglea recently joined A2A Limited as an accounting clerk. As a part of financial reporting process, she receives the following source documents to prepare journal vouchers for general ledger entries. purchase orders, sales invoices, and vendor invoices At the end of each day, Angela posts the journal vouchers to the general ledger and the related subsidiary ledgers. Each month the clerk reconciles the subsidiary accounts to their control accounts in the general ledger to ensure that they balance. Required: Discuss any control weaknesses and risks associated with the accounting information system of A2A Limited. Please provide references as well.arrow_forward
- Feinman Computers sells desktop computer systems that it manufactures from parts and software that thirdparty vendors provide. Customers are both private consumers and small businesses. Consumers pay cash or by credit card, but business customers buy on credit. A credit check is made of all new business customers before approving a line of credit. Sales are made online or by a hard-copy order document that customers mail or fax to the company.When a credit order is received, the sales clerk verifies inventory availability, prepares a sales order and sends the stock release copy to Willy, a warehouse employee who picks the goods and arranges shipment. Willy then prepares the bills of lading and shipping notices. Barb in the billing department receives the shipping notice from Willy and updates the inventory subsidiary ledger to account for the reduction in inventory. Barb files the stock release, prepares the invoice, and mails a copy of it to the customer. Barb then updates the sales…arrow_forwardAn accountant recommends a local computer company to a client that is trying to upgrade its computerized sales records. The client purchases $25,000 worth of equipment and sends a check to the accountant for 5 percent of the total sales. This is an example of aa. Commission.b. Contingent fee.c. Referral fee.d. Nonaudit fee.arrow_forwardIt is the last day of the month and fiscal year, your manager asks you to create an invoice for $10,000 (debiting Accounts Receivable and Crediting Sales) and send it to a specified customer. Normally invoices are sent to customers when products have been shipped or the service has been finished. You manager tells you that we will be shipping equipment and performing the setup services for this customer next month (as early as next week). How would the company’s financial statements (and the users of the financial statements) be affected if you record this entry?arrow_forward
- Credit Card Sales Jamie’s Fabrics accepts cash, personal checks, and two credit cards when customers buy merchandise. With the Great American Bank Card, Jamie’s Fabrics receives an immediate deposit in its checking account when credit card sales slips are deposited at the bank. The bank charges a three percent fee. With the United Merchants Card, Jamie’s Fabrics mails the credit card sales slips to United Merchants’ regional processing center each day. United Merchants accumulates these slips for two days and then mails a check to Jamie’s Fabrics, after deducting a three percent fee. Prepare journal entries to record the following: Round to the nearest dollar. a. Sales for March 15 were as follows: Cash and checks $950 Great American Bank Card (Deposited at the end of the day) 1,200 United Merchants Card (Mailed at the end of the day) 700 $2,850 b. Received a check for $1,900 from United Merchants on March 20. a. General Journal Date Description…arrow_forwardBurchill Consultants is a global consulting firm. The firm has a travel policy that reimburses employees for the "ordinary and necessary" costs of business travel and reimburses business-class airfare for international and "long" domestic flights. Associates at the firm often mix a business trip with pleasure by either extending the time at the destination or traveling from the business destination to a nearby resort or other personal destination. When this happens, an allocation must be made between the business and personal portions of the trip, so that only the business portion is reimbursed. However, the travel policy is unclear on the allocation method to follow. Consider this example. An employee obtained a business-class ticket for $8,557 and traveled the following itinerary. From Los Angeles Singapore Sydney To Singapore Sydney Los Angeles Miles 8,770 3,908 7,488 One-Way Regular Fare $ 3,396 2,150 3,618 1. Business portion of the airfare 2. Business portion of the airfare On…arrow_forwardBurchill Consultants is a global consulting firm. The firm has a travel policy that reimburses employees for the "ordinary and necessary" costs of business travel and reimburses business-class airfare for international and "long" domestic flights. Associates at the firm often mix a business trip with pleasure by either extending the time at the destination or traveling from the business destination to a nearby resort or other personal destination. When this happens, an allocation must be made between the business and personal portions of the trip, so that only the business portion is reimbursed. However, the travel policy is unclear on the allocation method to follow. Consider this example. An employee obtained a business-class ticket for $8,557 and traveled the following itinerary. From Los Angeles Singapore Sydney To Singapore Sydney Los Angeles Miles 8,770 3,908 7,488 One-Way Regular Fare $ 3,396 2,150 3,618 On the date of the flights between Los Angeles and Singapore (and return),…arrow_forward
- Osborne Shipbuilding Company, located in Baton Rouge, receives large remittances from its customers in New York and California. If the firm deposits these checks in its local bank, two business days are required for the checks toclear and the funds to become usable by the firm. However, if Osborne sends an employee to New York or Californiaand presents the check for payment at the bank upon which it is drawn, the funds are available immediately to thefirm. The firm can earn 8% per annum on short-term investments, and the cost of sending an employee to New Yorkor California to present the check for payment is $500. What is the net benefit to the firm of employing this specialhandling technique for a $5 million check received on Tuesday? (Assume 365 days per year.)arrow_forwardMunchies Inc. is a business that offers meal plans to college students. Students, or their families, buy debit cards with fixed amounts that they can use to purchase food at more than 50 local restaurants. Munchies sells the cards to students using an online storefront and in several locations near major college campuses. The following paragraph describes the online card sale process:Customers enter their credit card information online and then the amount of purchase.Munchies’ software automatically checks the card number to determine that it is a valid credit card number; for instance, there are certain digits that indicate Visa cards. The software displays an error message if the number is not valid. The usual cause of these errors is typographical. Once the customer completes the card order screen, the software sends the data in an encrypted form to Munchies’ host computer. Periodically, the company’s accountant retrieves transactions from the server. This is done by clicking on the…arrow_forwardCoca Cola Corp. received an order from a customer on October 1. The toys were shipped on October 15. The customer sent a check for full payment on November 5. Coca Cola received the check on November 10 and deposited it in the bank account. Coca Cola should record sales revenue related to this series of transactions on ___arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub