Question

1) The following transactions are July activities of Bill’s Extreme Bowling, Inc., which operates several bowling centers. If revenue is to be recognized in July, indicate the amount.

Activity Amount a. Bill’s collected $14,300 from customers for services related to games played in July. b. Bill’s billed a customer for $370 for a party held at the center on the last day of July. The bill is to be paid in August. c. The men’s and women’s bowling leagues gave Bill’s advance payments totaling $2,500 for the fall season that starts in September. d. Bill’s received $2,250 from credit sales made to customers last month (in June).

2) The following transactions are July activities of Bill’s Extreme Bowling, Inc., which operates several bowling centers. If an expense is to be recognized in July, indicate the amount.

	Activity Amount a. Bill’s paid $1,850 in July to plumbers for repairing a broken pipe in the restrooms. b. Bill’s paid $2,100 for the June electricity bill and received the July bill for $2,850, which will be paid in August. c. Bill’s paid $5,650 to employees for work in July.

3)

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:

Required:

For each of the transactions, if revenue is to be recognized in September, indicate the amount. (Enter your answers in dollars but not in millions.)

Activity Amount a. Guppie Enterprises Inc. issued $15 million in new common stock. b. Chrome University received $23,400,000 cash for 90,000 five-game-season football tickets. None of the games have been played. c. Chrome played the first football game referred to in (b). d. Mell Construction Company signed a contract with a customer for the construction of a new $626,000 warehouse. At the signing, Mell received a check for $62,600 as a deposit to be applied against amounts earned during the first phase of construction. Answer from Mell’s standpoint. e. A popular snowboarding magazine company received a total of $2,800 today from subscribers. The subscriptions begin in the next fiscal year. Answer from the magazine company’s standpoint. f. TrusTee Communications sold a $160 cell phone plan for service in September to a customer who charged the sale on his credit card. Answer from the standpoint of TrusTee Communications.

Answer 1

1) The following transactions are July activities of Bill's Extreme Bowling, Inc., which operates several bowling centers. If revenue is to be recognized in July, indicate the amount. $ Activity Bill's collected $14,300 from customers for services related to games played in July. Bill's billed a customer for $370 for a party held at the center on the last day of July. The bill is to be paid in August. The men's and women's bowling leagues gave Bill's advance payments totaling $2,500 for the fall season that starts in September. Bill's received $2,250 from credit sales made to customers last month (in June). Amount Explanation Since the services performed in July can be 14,300 recognised as revenue Since the services performed in July, can be recognised as revenue. Payment for services 370 not a deciding factor for revenue. It is an advance from customer and will recognised as revenu in the month of Sep It receipt from Accounts Receivable and not a revenue

2) The following transactions are July activities of Bill's Extreme Bowling, Inc., which operates several bowling centers. If an expense is to be recognized in July, indicate the amount. Activity $ Bill's paid $1,850 in July to plumbers for repairing a broken pipe in the restrooms. Bill's paid $2,100 for the June electricity bill and received the July bill for $2,850, which will be paid in August. Amount Explanation Expense relating to current month. Assumed as no asset has been created from such 1,850.00 repair Expense shall be recognised as when incurred irrespective of Payment.Hence July 2,850.00 bill is recognised as expense Expense shall be recognised as when 5,650.00 incurred irrespective of Payment $ Bill's paid $5,650 to employees for work in July. $

3)According to the revenue recognition principle, revenues should be recognized when or as the company performs acts promised to the customer. For Required:For each of the transactions, if revenue is to be recognized in September, indicate the amount. (Enter your answers in dollars but not in millions.) $ Amount Explanation Issue of Stock does not generate any Revenue Since no services perfomed in Sep according no revenue. 52.00 Note 1 below $ Activity Guppie Enterprises Inc. issued $15 million in new common stock. Chrome University received $23,400,000 cash for 90,000 five-game- season football tickets. None of the games have been played. Chrome played the first football game referred to in (b). Mell Construction Company signed a contract with a customer for the construction of a new $ 626,000 warehouse. At the signing, Mell received a check for $62,600 as a deposit to be applied against amounts earned during the first phase of construction. Answer from Mell's standpoint. A popular snowboarding magazine company received a total of $2,800 today from subscribers. The subscriptions begin in the next fiscal year. Answer from the magazine company's standpoint. Trustee Communications sold a $160 cell phone plan for service in September to a customer who charged the sale on his credit card. Answer from the standpoint of Trustee Communications. Amounts received at the time signing contract and no work is done. Though the amount received, company did not perform acts as promised to the customer. Since the services performed in Sep can be recognised as revenue.Receipt for service not 160.00 la criteria for Revenue recognisation $ $ Note 1 Amount Received Total games to be placed (90000*5) Amount Received once game 23,400,000 450000 52.00 $