REVENUE AND EXPENSE RECOGNITION Electronic Repair Company repaired a high-definition television for Sarah Merrifield in December 2009. Sarah paid $50 at the time of the repair and agreed to pay Electronic Repair Company $50 each month for five months beginning on January 15, 2010. Electronic Repair Company used $80 of supplies, which were purchased in November 2009, to repair the television.

Required:

. In what month or months should revenue from this service be recorded by Electronic Repair Company?

. In what month or months should the expense related to the repair of the television be recorded by Electronic Repair Company?

. Describe the accounting principles used to answer the above questions.

Exercise