Faucet Plumbing receives a phone call from a customer needing a new water heater on October and schedules a consultation for a free estimate on November 3. Faucet installs the new water heater on November 5. The customer pays for service on November 15. According to the revenue recognition principle, on which date should Faucet record service revenue?

Faucet Plumbing receives a phone call from a customer needing a new water heater on October and schedules a consultation for a free estimate on November 3. Faucet installs the new water heater on November 5. The customer pays for service on November 15. According to the revenue recognition principle, on which date should Faucet record service revenue?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 4PA: Review the following transactions, and prepare any necessary journal entries for Juniper Landscaping...

See similar textbooks

Similar questions

Review the following transactions, and prepare any necessary journal entries for Juniper Landscaping Services. A. On November 5, Juniper receives advance cash payment from a customer for landscaping services in the amount of $3,500. Juniper had yet to provide landscaping services as of November 5. B. On December 11, Juniper provides all of the landscaping services to the customer from November 5. C. On December 14, Juniper receives advance payment from another customer for landscaping services in the amount of $4,400. Juniper has yet to provide landscaping services as of December 14. D. On January 19 of the following year, Juniper provides and recognizes 80% of landscaping services to the customer from December 14.
On May 5, Johnson Plumbing receives a phone call from a customer needing a new water heater and schedules a service visit for May 7. On May 7, Johnson installs the new water heater. The customer pays for services on May 10. According to the revenue recognition principle, on which date should Johnson record service revenue? a. May 5 (date of phone call). b. May 7 (date of service). c. May 10 (date of cash receipt). d. Evenly over the three dates.
The following events occurred for Palette Painters, Inc: September 18 Purchased paint on account. October 7 A customer signed a contract to have her house painted. October 24 Palette Painters paid for the paint purchased on account on September 18th. October 30 The customer paid Palette Painters for the work contracted for on October 7. November 5 Palette Painters painted the customer’s house. According to the Revenue Recognition and Matching Principles, Palette Painters, Inc. should record Group of answer choices A. the revenue in November and the expense in September. B. The revenue and expenses in October. C. The revenue in October and the expenses in September. D. The revenue and expenses in November.
Identify the letter for the principle or assumption from A through F in the blank space next to situation that it best explains or justifies: _________In December of this year, Chavez Landscaping received a customer’s order and cash prepayment to install sod at a house that would not be ready for installation until March of next year. Chavez should record the revenue from the customer order in March of next year, not in December of this year.
A lawn service bills a customer $800 on June 1 for two months of mowing (June and July). The customer pays the bill on July 1. When is revenue recorded?
As the owner of a hair salon business, you expect to recieve the utility bill on June 14 for the service provided in May. The average monthly bill is around $3,500. 1. When should the utility bill be recorded dated June 14? a) In June, because this is when you received the bill. b) In July, because this is when you will pay the bill. c) In May, because this is when the expense was incurred. Please explain for the answer.
Secure Home provides house-sitting for people while they are away on vacation. Some of its customers pay immediately after the job is finished. Some customers ask that the business send them a bill. As of the end of the year, Secure Home has collected $1,920 from cash-paying customers. Secure Home’s remaining customers owe the business $2,660. Secure Home recorded $1,920 of service revenue for the year. correct If Secure Home had recorded their service revenue using the other method, how much service revenue would they have recorded for the year?
Classic Customs began operations on December 1, 2020. In setting up the bookkeeping procedures, the company decided to debit expense accounts when the company prepays its expenses and to credit revenue accounts when customers pay for services in advance. Supplies were purchased on December 1 for $8,000. The company prepaid insurance premiums of $3,200 on December 2. On December 15, the company received an advance payment of $16,100 from one customer for re-modeling work. By counting the supplies on December 31, Classic Customs determined that $1,450 was on hand. An analysis of the insurance policies in effect on December 31 showed that $800 of insurance coverage had expired. As of December 31, it was determined that $8,500 of the amount received in advance on December 15 had been earned. Prepare journal entries for items (a) through (c) and adjusting entries as of December 31, 2020, for items (d) through (f).
Conceptual Connection: For each situation, indicate when the company should recognize revenue on an accrual basis. a. A store sells a gift card in December which will be given as a Christmas present. The card is not redeemed until January.
XYZ Company usually purchases office supplies monthly as it needs them and pays for them the following month. Office Supplies would be considered A. an unearned revenue. B. a prepaid expense. C. an accrued revenue. D. an accrued expense.
A man received an invoice for washing machine for $455 dated April 17, with a sales term of 2/10 EOM. How much should he pay if he pay if he pays bill on April 28?
Coronado Real Estate received a check for $28800 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $28800. Financial statements will be prepared on July 31. Coronado Real Estate should make the following adjusting entry on July 31: A) Debit Unearned Rent Revenue, $28800; Credit Rent Revenue, $25600. B) Debit Cash, $28800; Credit Rent Revenue, $28800. C) Debit Rent Revenue, $4800; Credit Unearned Rent Revenue, $4800. D) Debit Unearned Rent Revenue, $4800; Credit Rent Revenue, $4800. eTextbook and Media