The following transactions are given:

1, Rent for two months of $1,200 was paid in advance.

2, A customer’s order was received for a bridal veil that will be billed at delivery for $120.

3, Supplies, purchased three months ago at a cost of $300, were used in the current month.

4, An etching by Picasso was purchased in 1960 for $400. A similar etching just sold at Sotheby’s for $45,000.

5, Equipment purchased 10 years ago had monthly depreciation recorded of

$900. The equipment had an original useful life of five years and is still in use.

6, An architect was paid a $2,000 retainer for preparing designs and plans for a new office.

7, Wages of $120, earned by employees on New Year’s Eve, will be paid on January 5.

8, A mortgage loan was issued last year, but the creditors are now three months delinquent in their monthly payments.

Required:

Discuss how the matching and revenue recognition principles would be used to determine the revenue or expense in each of the transactions: