Question

E3-4 (Algo) Identifying Expenses LO3-2, 3-3

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:

e. The campus bookstore receives 740 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 480 accounting texts received in (e) at a sales price of $140 each

Required: For each of the transactions, if an expense is to be recognized in January, indicate the expense account title and the amount. (If expense is not recognized choose "None".) Expense Account Affected Amount of Expense Incurred in January pour VISINE CAPS PS LA ZA e. None f. Cost of goods sold $ 67,200

Cannot figure out what the Amount of Expense Incurred in January for part f is. I am told this answer is incorrect but the Cost of goods sold under Expense Account Affected is correct. I would appreciate any help.

Answer 1

	Expense account Affected	Amount of expense incurred in January
f	Cost of goods sold	47040

Workings:
Accounting texts sold	480
X Cost per unit	98
Cost of goods sold	47040