Expense Recognition (or Matching) Principle The following information describes transactions for Morgenstern Advertising Company during July: a. On July 5, Morgenstern purchased and received $24,300 of supplies on credit from Drexel Supply Inc. During July, Morgenstern paid $19,800 cash to Drexel and used $18,350 of the supplies. b. Morgenstern paid $8,600 to salespeople for salaries earned during July. An additional $1,110 was owed to salespeople at July 31 for salaries earned during the month. c. Paid $2,950 to the local utility company for electric service. Electric service in July was $2,300 of the $2,950 total bill. Required: 1. Calculate the amount of expense recognized in July under cash-basis accounting. 33,050 X 2. Calculate the amount of expense recognized in July under accrual-basis accounting. 31,960 X

Expense Recognition (or Matching) Principle The following information describes transactions for Morgenstern Advertising Company during July: a. On July 5, Morgenstern purchased and received $24,300 of supplies on credit from Drexel Supply Inc. During July, Morgenstern paid $19,800 cash to Drexel and used $18,350 of the supplies. b. Morgenstern paid $8,600 to salespeople for salaries earned during July. An additional $1,110 was owed to salespeople at July 31 for salaries earned during the month. c. Paid $2,950 to the local utility company for electric service. Electric service in July was $2,300 of the $2,950 total bill. Required: 1. Calculate the amount of expense recognized in July under cash-basis accounting. 33,050 X 2. Calculate the amount of expense recognized in July under accrual-basis accounting. 31,960 X

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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