E3-7 (Algo) Identifying Accrual Basis Expenses [LO 3-1, LO 3-2]Under accrual basis accounting, expenses are recognized when incurred. The following transactions occurred in January: Required:For each of the transactions, if an expense is to be recognized in January, indicate the amount. (Enter youranswers in dollars but not in millions.)ActivityAmounta. AMZ Wealth Management paid its salespersons $6,100 in commissionsrelated to December sales of financial advisory services. Answer from AMZWealth Management's standpoint.b. On January 31, AMZ Wealth Management determined that it will pay itssalespersons $5,650 in commissions related to January sales. The paymentwill be made in early February. Answer from AMZ Wealth Management'sstandpoint.24245,650c. The city of Omaha hired RM, Inc., to provide trash collection servicesbeginning January 1. The city paid $9.6 million for the entire year. Answerfrom the city's standpoint.d. The University of Florida paid $15,300 in advance for refundable airlinetickets to fly the baseball team to a tournament in California. The first gamewill be played in March. Answer from the university's standpoint.e. A Houston Community College employee worked eight hours, at $8 perhour, on January 31; payday is not until February 3. Answer from thecollege's point of view.f. Wang Company paid $5,760 for a fire insurance policy on January 1. Thepolicy covers 12 months beginning on January 1. Answer from Wang's pointof view.g. Ziegler Company, a farm equipment company, received a phone bill for$540 of January calls. The bill has not been paid to date.$115,200,000642448024540%24%24

Answered: For each of the transactions, if an…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 5PB: Review the following transactions and prepare any necessary journal entries. A. On January 5, Bunnet...

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E3-7 (Algo) Identifying Accrual Basis Expenses [LO 3-1, LO 3-2]

Under accrual basis accounting, expenses are recognized when incurred. The following transactions occurred in January:

Required:
For each of the transactions, if an expense is to be recognized in January, indicate the amount. (Enter your
answers in dollars but not in millions.)
Activity
Amount
a. AMZ Wealth Management paid its salespersons $6,100 in commissions
related to December sales of financial advisory services. Answer from AMZ
Wealth Management's standpoint.
b. On January 31, AMZ Wealth Management determined that it will pay its
salespersons $5,650 in commissions related to January sales. The payment
will be made in early February. Answer from AMZ Wealth Management's
standpoint.
24
24
5,650
c. The city of Omaha hired RM, Inc., to provide trash collection services
beginning January 1. The city paid $9.6 million for the entire year. Answer
from the city's standpoint.
d. The University of Florida paid $15,300 in advance for refundable airline
tickets to fly the baseball team to a tournament in California. The first game
will be played in March. Answer from the university's standpoint.
e. A Houston Community College employee worked eight hours, at $8 per
hour, on January 31; payday is not until February 3. Answer from the
college's point of view.
f. Wang Company paid $5,760 for a fire insurance policy on January 1. The
policy covers 12 months beginning on January 1. Answer from Wang's point
of view.
g. Ziegler Company, a farm equipment company, received a phone bill for
$540 of January calls. The bill has not been paid to date.
$115,200,000
64
24
480
24
540
%24
%24

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Accrual basis implies that the expenses and revenues are recognized as and when it's due irrespective or the timing of expenditure or receipt relating to the same.

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