Need help on E3-5 & E3-6
E3-5 Identifying Accrual Basis Revenues LO 3-1,3-2 According to the revenue recognition principle, revenues should be recognized when or as the company performs acts promised to the customer. For many businesses, this condition is met at the point of delivery of goods or services. The following transactions occurred in September a. Gillespie Enterprises Inc. issued $26 million in new common stock b. Cal State University received $20,000,000 cash for 80,000 five-game-season football tickets. None of the games have been played C. Cal State played the first football game referred to in (b). d. Hall Construction Company signed a contract with a customer for the construction of a new $500,000 warehouse. At the signing, Hall received a check for $50,000 as a deposit to be applied against amounts earned during the first phase of construction. Answer from Hall's standpoint e. A popular snowboarding magazine company received a total of $1,800 today from subscribers. The subscriptions begin in the next fiscal year. Answer from the magazine company's standpoint f. T-Mobile sold a S100 cell phone plan for service in September to a customer who charged the sale on his credit card. Answer from the standpoint of T-Mobile. Required: For each of the transactions, if revenue is to be recognized in September, indicate the amount. If revenue is not to be recognized in September, explain why E3-6 Identifying Accrual Basis Expenses LO 3-1,3-2 Under accrual basis accounting, expenses are recognized when incurred, which means the activity giving rise to the expense has occurred. Assume the following transactions occurred in January: a. Dell paid its computer service technicians $90,000 in salary for work done in January. Answer from Dell's standpoint. b. At the beginning of January, Turner Construction Company paid $3,000 in rent for February-April. c. McGraw-Hill Education-publisher of this textbookused $3,000 worth of electricity and natural gas in January, which it has not paid or recorded d. Pooler Company received and paid in January a $1,500 invoice from a consulting firm for services received in January e. The campus bookstore received consulting services at a cost of $5,000. The terms indicate that payment is due within 30 days of the consultation. f. Schergevitch Incorporated had its delivery van repaired in January for $280 and charged the amount on account. Page 134 Required: For each of the transactions, if an expense is to be recognized in January, indicate the amount. If an expense is not to be recognized in J January, indicate why E3-5 Identifying Accrual Basis Revenues LO 3-1,3-2 According to the revenue recognition principle, revenues should be recognized when or as the company performs acts promised to the customer. For many businesses, this condition is met at the point of delivery of goods or services. The following transactions occurred in September a. Gillespie Enterprises Inc. issued $26 million in new common stock b. Cal State University received $20,000,000 cash for 80,000 five-game-season football tickets. None of the games have been played C. Cal State played the first football game referred to in (b). d. Hall Construction Company signed a contract with a customer for the construction of a new $500,000 warehouse. At the signing, Hall received a check for $50,000 as a deposit to be applied against amounts earned during the first phase of construction. Answer from Hall's standpoint e. A popular snowboarding magazine company received a total of $1,800 today from subscribers. The subscriptions begin in the next fiscal year. Answer from the magazine company's standpoint f. T-Mobile sold a S100 cell phone plan for service in September to a customer who charged the sale on his credit card. Answer from the standpoint of T-Mobile. Required: For each of the transactions, if revenue is to be recognized in September, indicate the amount. If revenue is not to be recognized in September, explain why E3-6 Identifying Accrual Basis Expenses LO 3-1,3-2 Under accrual basis accounting, expenses are recognized when incurred, which means the activity giving rise to the expense has occurred. Assume the following transactions occurred in January: a. Dell paid its computer service technicians $90,000 in salary for work done in January. Answer from Dell's standpoint. b. At the beginning of January, Turner Construction Company paid $3,000 in rent for February-April. c. McGraw-Hill Education-publisher of this textbookused $3,000 worth of electricity and natural gas in January, which it has not paid or recorded d. Pooler Company received and paid in January a $1,500 invoice from a consulting firm for services received in January e. The campus bookstore received consulting services at a cost of $5,000. The terms indicate that payment is due within 30 days of the consultation. f. Schergevitch Incorporated had its delivery van repaired in January for $280 and charged the amount on account. Page 134 Required: For each of the transactions, if an expense is to be recognized in January, indicate the amount. If an expense is not to be recognized in J January, indicate why
