Horngren's Accounting (11th Edition)
11th Edition
ISBN: 9780133856781
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 3, Problem E3.18E
E3-18 Comparing cash and accrual basis accounting and applying the revenue recognition principle
| Learning Objectives 1,2 |
Momentous Occasions is a photography business that shoots videos at college parties. The freshman class pays $1, 000 in advance on March 3 to guarantee services for its party to be held on April 2. The sophomore class promises a minimum of $2, 800 for filming its formal dance and actually pays cash of S4, 100 on February 28 at the dance.
Answer the following questions about the correct way to account for revenue under the accrual basis:
- Considering the $1, 000 paid by the freshman class, on what date was revenue recognized? Did the recognition occur on the same date cash was received?
- Considering the S4, 100 paid by the sophomore class, on what date was revenue recognized? Did the recognition occur on the same date cash was received?
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E3-29B. (Learning Objectives 1, 2: Explain how accrual accounting differs from cash-basisaccounting; apply the revenue and expense recognition principles) During 2018, BarronNetwork, Inc., which designs network servers, earned revenues of $740 million. Expensestotaled $560 million. Barron collected all but $26 million of the revenues and paid $610 millionon its expenses.a. Under accrual accounting, what amount of revenue should Barron report for 2018? Howdoes the revenue principle help to answer this question?b. Under accrual accounting, what amount of total expense should Barron report for 2018?Which accounting principle helps to answer this question?c. Redo parts a and b using the cash basis. Explain how the accrual basis differs from thecash basis.d. Which financial statement reports revenues and expenses? Which statement reports cashreceipts and cash payments?
Comparing cash and accrual basis accounting and applying the revenue recognition principle
Momentous Occasions is a photography business that shoots videos at college parties. The freshman class pays $1,000 in advance on March 3 to guarantee services for its party to be held on April 2. The sophomore class promises a minimum of $2,800 for filming its formal dance and actually pays cash of $4,100 on February 28 at the dance. Answer the following questions about the correct way to account for revenue under the accrual basis:
Considering the $1,000 paid by the freshman class, on what date was revenue earned? Did the earnings occur on the same date cash was received?
Considering the $4,100 paid by the sophomore class, on what date was revenue earned? Did the earnings occur on the same date cash was received?
S3-13. (Learning Objective 3: Adjust the accounts for accrued and unearned revenue)Dexter, Inc., collects cash from customers in advance and from other customers after the sale.Journalize the following transactions for Dexter:a. Accrued revenue. Some customers pay Dexter after Dexter has performed the servicefor the customer. During 2018, Dexter performed services for $22,000 on account andlater received cash of $9,000 on account from these customers.b. Unearned revenue. A few customers pay Dexter in advance, and Dexter later performsthe service for the customer. During 2018, Dexter collected $4,500 cash in advance andlater earned $3,000 of this amount.
Chapter 3 Solutions
Horngren's Accounting (11th Edition)
Ch. 3 - Prob. 1QCCh. 3 - Get Fit Now gains a client who prepays S540 for a...Ch. 3 - The revenue recognition principle requires...Ch. 3 - Adjusting the accounts is the process of Learning...Ch. 3 - Which of the following is an example of a deferral...Ch. 3 - Assume that the weekly payroll of In the Woods...Ch. 3 - Prob. 7QCCh. 3 - A equity overstated income statement: expense...Ch. 3 - A worksheet Learning Objective 6 is a journal used...Ch. 3 - On February 1, Clovis Wilson Law Firm contracted...
Ch. 3 - What is the difference between cash basis...Ch. 3 - Which method of accounting (cash or accrual basis)...Ch. 3 - Prob. 3RQCh. 3 - What is a fiscal year? Why might companies choose...Ch. 3 - Under the revenue recognition principle, when is...Ch. 3 - Under the matching principle, when are expenses...Ch. 3 - When are adjusting entries completed and what is...Ch. 3 - What are the two basic categories of adjusting...Ch. 3 - What is a deferred expense? Provide an example.Ch. 3 - What is the process of allocating the cost of a...Ch. 3 - What is a contra account?Ch. 3 - Prob. 12RQCh. 3 - What does accumulated depreciation represent?Ch. 3 - Prob. 14RQCh. 3 - What is a deferred revenue? Provide an example.Ch. 3 - What is an accrued expense? Provide an example.Ch. 3 - What is an accrued revenue? Provide an example.Ch. 3 - What are the two rules to remember about adjusting...Ch. 3 - When is an adjusted trial balance prepared, and...Ch. 3 - Prob. 20RQCh. 3 - What is a worksheet, and how is it used to help...Ch. 3 - If a payment of a deferred expense was recorded...Ch. 3 - If a payment of a deferred expense was recorded...Ch. 3 - Prob. S3.1SECh. 3 - Prob. S3.2SECh. 3 - Prob. S3.3SECh. 3 - Prob. S3.4SECh. 3 - S3-5 Identifying types of adjusting entries...Ch. 3 -
S3-6 Journalizing and posting adjusting entries...Ch. 3 - Prob. S3.7SECh. 3 - Prob. S3.8SECh. 3 - Prob. S3.9SECh. 3 - Prob. S3.10SECh. 3 - Prob. S3.11SECh. 3 - Journalizing an adjusting entry for accrued...Ch. 3 - Prob. S3.13SECh. 3 - Determining the effects on financial statements...Ch. 3 - Prob. S3.15SECh. 3 - Prob. S3A.16SECh. 3 - Prob. S3A.17SECh. 3 - E3-18 Comparing cash and accrual basis accounting...Ch. 3 - Comparing cash and accrual basis accounting and...Ch. 3 - Prob. E3.20ECh. 3 - Prob. E3.21ECh. 3 -
E3-22) Journalizing adjusting entries
Consider...Ch. 3 - Prob. E3.23ECh. 3 - Journalizing adjusting entries and posting to...Ch. 3 - Journalizing adjusting entries and posting to...Ch. 3 - Prob. E3.26ECh. 3 - Prob. E3.27ECh. 3 - Journalizing adjusting entries and analyzing their...Ch. 3 - Prob. E3.29ECh. 3 - Prob. E3.30ECh. 3 - Prob. E3A.31ECh. 3 - Prob. E3A.32ECh. 3 - Prob. P3.33APGACh. 3 - Prob. P3.34APGACh. 3 - Prob. P3.35APGACh. 3 - Prob. P3.36APGACh. 3 - Prob. P3.37APGACh. 3 - Prob. P3A.38APGACh. 3 - Prob. P3.39BPGBCh. 3 - Prob. P3.40BPGBCh. 3 - Prob. P3.41BPGBCh. 3 - Prob. P3.42BPGBCh. 3 - Prob. P3.43BPGBCh. 3 - Understanding the alternative treatment of prepaid...Ch. 3 - Prob. P3.45CPCh. 3 - Prob. P3.46PSCh. 3 - One year ago, Tyler Stasney founded Swift...Ch. 3 - Prob. 3.1EICh. 3 - Prob. 3.1FCCh. 3 - Prob. 3.1FSC
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