Question

Revenues are normally recognized when a company transfers promised goods or services to customers in the amount the company expects to be entitled to receive. Expense recognition is guided by an attempt to match the costs associated with the generation of those revenues to the same time period. Assume that the following transactions occurred in January: a. McGraw-Hill Education uses $2,774 worth of electricity and natural gas in its headquarters building for which it has not yet been billed. b. At the beginning of January, Turner Construction Company pays $966 for magazine advertising to run in monthly publications each of the first three months of the year. C. Dell pays its computer service technicians $379,500 in salaries for the two weeks ended January 7. Answer from Dell's standpoint. d. The University of Florida orders 68,000 football tickets from its printer and pays $7,740 in advance for the custom printing. The first game will be played in September. Answer from the university's standpoint. e. The campus bookstore receives 680 accounting texts at a cost of $98 each. The terms indicate that payment is due within 30 days of delivery. f. During the last week of January, the campus bookstore sold 520 accounting texts received in (e) at a sales price of $120 each. g. Fucillo Automotive Group pays its salespersons $14,300 in commissions related to December automobile sales. Answer from Fucillo's standpoint. h. On January 31, Fucillo Automotive Group determines that it will pay its salespersons $49,670 in commissions related to January sales. The payment will be made in early February. Answer from Fucillo's standpoint. i. A new grill is received and installed at a Wendy's restaurant at the end of the day on January 31; a $14,550 cash payment is made on that day to the grill supply company. Answer from Wendy's standpoint. j. Mall of America (in Bloomington, MN) had janitorial supplies costing $4,100 in storage. An additional $3,300 worth of supplies was purchased during January. At the end of January, $1,600 worth of janitorial supplies remained in storage. k. An lowa State University employee works eight hours, at $22 per hour, on January 31; however, payday is not until February 3. Answer from the university's point of view. 1. Wang Company paid $2,400 for a fire insurance policy on January 1. The policy covers 12 months beginning on January 1. Answer from Wang's point of view. m. Derek Incorporated has its delivery van repaired in January for $580 and charges the amount on account. n. Hass Company, a farm equipment company, receives its phone bill at the end of January for $262 for January calls. The bill has not been paid to date. o. Martin Company receives and pays in January a $1,385 invoice (bill) from a consulting firm for services received in January.

Answer 1

Account title for above transactions.

a) Accounts receivable for electricity and gas provided.

Account receivable  A/c Dr XXXX

To Revenue for electricity and gas A/c XXXX

		Dr	Cr
B.	Advertising Exp A/c Dr	322
	Prepaid exp A/c Dr		322
	Bank A/c		966
	Advance paid for salaries
C.	Advance for salaries A/c Dr	379500
	Bank A/c		379500
D.	Advance payment for custom printing
	Advance for expenses A/c Dr	7740
	Bank A/c		7740
E	Books purchased credit
	Books a/c Dr	66640
	Accounts payable A/c		66640
F	Books sale for cash
	Cash/Bank A/c Dr	62400
	Books A/c		62400
G	Entry for commission paid to sales persons
Dec	Commisson Exp A/c Dr	14300
	Accounts payable A/c		14300
Jan	Accounts payable A/c	14300
	Bank A/c		14300
H	Commission expenses for January
	Commission Exp A/c Dr	49670
	Accounts payable A/c		49670
i	New girll purchased for cash
	New girll A/c Dr	14550
	Cash A/c		14550