Question

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 Required: For each of the transactions, if an expense is to be recognized in January, indicate the amount. Activity Amount Dugg paid its computer service technicians $126,500 in salary for work done in January. Answer from Dugg's standpoint. At the beginning of January, Turner Construction Company paid $3,900 in rent for February-April McGraw-Hill Education publisher of this textbook used $4,800 worth of electricity and natural gas in January, which it has not paid or recorded. Pooler Company received and paid in January a $1,700 invoice from a consulting firm for services received in January The campus bookstore received consulting services at a cost of $8,900. The terms indicate that payment is due within 30 days of the consultation. Schergevitch Incorporated had its delivery van repaired in January for $445 and charged the amount on account.

Answer 1

Answer:

Activity	Amount
a	$126,500
b	$0
c	$4,800
d	$1,700
e	$8,900
f	$445

Explanations:

Under accrual basis accounting, expenses are recognized when incurred.

Activity a	Salary paid for work done in January. This expense incurred in January. So, $126,500 January month's expense.
Activity b	Rent paid for February-April. This expense is not related to January. So, No expense incurred in January.
Activity c	Electricity and gas used in January. It means expense incurred in January. So, $4,800 January month's expense even if it is paid later.
Activity d	Paid for services received in January. Expense incurred in January. So, $1,700 January month's expense.
Activity e	Services received in January. So, $8,900 is January month's expense even if it is due in 30 days.
Activity f	Repaired in January. So, $445 is January months's expense even if cash not paid in January.