Q1. Apply revenue and expense recognition principles to answer each of the following questions. Show your explanation and steps. February 5 On September 1 of the current year, Prepaid Rent was debited for $3,000. This amount represents payment for one year of rent, paid in advance. Write down this adjusting entry on December 31. On December 1, 2020, Cream Ale Ltd. receives $1,800 in advance for an agreement to brew beer during the months of December, January, and February. What's the revenue recognized under accrual accounting? What's the revenue recognized under case-basis accounting? A construction company is building a highway system, and construction will take three years. How do you think this company should record the revenue or recognized its earned revenue? Upper Canada Corp. bought $72,000 of equipment with an estimated service life of 4 years. The equipment will be worthless at the end of its life. What is the annual amount of depreciation on this equipment? Employees earned wages of $20,000 during the current month but were not paid until the following month. Should the employer record any expenses at the end of the current month?