Textbook Problem

Exercise 3-40 Revenue and Expense Recognition

Electronic Repair Company repaired a high-definition television for Sarah Merrifield in December 2019. Sarah paid $80 at the time of the repair and agreed to pay Electronic Repair $80 each month for 5 months beginning on January 15, 2020. Electronic Repair used $120 of supplies, which were purchased in November 2020, to repair the television. Assume that Electronic Repair uses accrual-basis accounting.

Required:

1. In what month or months should revenue from this service be recorded by Electronic Repaid?
2. In what month or months should the expense related to the repair of the television be recorded by Electronic Repair?
3. CONCEPTUAL CONNECTION Describe the accounting principles used to answer the above questions.