Question

The company has a balance of $800 at the beginning of the year. The amount on hand at the end of the year is $600. The company has calculated the Expense for the year to be $3,500. Based on this information, what amount of office supplies was purchased during the year? ___________________

During 2012, Sigma Company earned service revenues amounting to $700,000, of which $630,000 was collected in cash; the balance will be collected in January 2013. The 2012 income statement of the company should report the following amount for service revenues      ______________________________

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Jon Company rendered services to customers amounting to $20,000 during 2012; the related cash was collected as follows: $16,000 in 2012; $4,000 in 2013. During 2012, $8,000 was incurred (and matched against 2012 revenue) for wages expense; the related cash payments were made as follows: $6,000 in 2012; in 2013 $2,000. Based only on these data, provide the following amounts:

                                   

Revenue to be recognized 2012: ____________________

Revenue to be recognized for 213: __________________

Expense to be recognized 2012: ____________________

Expense to be recognized for 2013: _________________

  Wages payable to be recognized for 2012: __________________

Answer 1

Supplies purchased during the year = Expenses during the year + Ending Inventory – Beginning Inventory

= 3500+600-800

= $3300

Amount to be reported = $700,000

As accrual principal states that revenue and expenses should be recognized in the period in which they are earned or incurred irrespective of receipt

Revenue in 2012: $20,000

2013 = $0

Expenses in 2012 = $8000

2013: $0

Payable = $2000 since pending payment

(all revenues and expenses relate to 2012 and hence, will be recorded in 2012)