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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Exercise 2-50 Journalizing Transactions

Remington Communications has been providing cellular phone service for several years. During

November and December. the following transactions occurred:

Nov. 2 Remington received S2,400 for November phone service from Enrico Company. 10

6 Remington purchased S4,750 of supplies from Technology Associates on

10 Remington paid S5,250 to its hourly employees for their weekly wages.

15 Remington paid S4, 750 to Technology Associates in full settlement Of its payable.

28 Remington paid S2, 150 for utilities used during November.

30 Remington received a bill from Monticello Construction for Sl,230 for repairs made to

Remington’s loading dock on November I S. Remington plans to pay the bill in early December.

Dec. 10 Remington paid S I ,230 to Monticello Construction to settle the repair bill received on

To determine

Journal Entries:

The medium through which all the business transaction are recorded in the books of accounts are called journal entries.

Requirement 1

Prepare journal entries to record the transactions.

Explanation
    Date Explanation
    Nov.
    2The advance payment for the service yet to be performed is recorded by debiting cash account as cash inflows and crediting the unearned service revenue to show a liability.
    6Purchase of supplies on account results in an increase of supplies and accounts payable by the same amount.
    10Debiting the wages expense increases the expenses and crediting the cash account decreases the cash balance of the company.
    15Settlement of accounts payable results in decrease of accounts payable and cash balance...
To determine

Matching Principle:

According to this principle all the expenses should be recorded in same accounting period in which its revenue is recognized. The primary purpose behind this principle is to show an accurate net income or loss during an accounting period.

Requirement 2

Determine the accounting principle applied in recording the November 10 transaction.

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