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. Amount Activity Dugg paid its computer service technicians $100,000 in salary for work done in January. Answer from Dugg's standpoint. At the beginning of January, Turner Construction Company paid $8,100 in rent for February-April. McGraw-Hill Education-publisher of this textbook-used $3,100 worth of electricity and natural gas in January, which it has not paid or recorded. Pooler Company received and paid in January a $1,800 invoice from a consulting firm for services received in January The campus bookstore received consulting services at a cost of $8,850 The terms indicate that payment is due within 30 days of the consultation Schergevitch Incorporated had its delivery van repaired in January for $525 and charged the amount on account.

Answer 1

	Activity	Amount
a.	Dugg paid its computer service technicians $100,000 in salary for work done in January. Answer from Dugg's standpoint.	$ 100,000
b.	At the beginning of January, Turner Construction Company paid $8,100 in rent for February-April.
c.	McGraw-Hill Education-publisher of this textbook-used $3,100 worth of electricity and natural gas in January, which it has not paid or recorded.	$             3,100
d.	Pooler Company received and paid in January a $1,800 invoice from a consulting firm for services received in January.	$             1,800
e.	The campus bookstore received consulting services at a cost of $8,850. The terms indicate that payment in due within 30 days of the consultation.	$             8,850
f.	Schergevitch incorporated had its delivery van repaired in January for $525 and charged the amount on account.	$                 525

b. The rent paid in January for the period February-April will be recorded as prepaid rent in January and charged to expense each month from February to April.