Chapter 3, Problem 3.5E

Identifying Accrual Basis Expenses

Under accrual basis accounting, expenses are recognized when incurred, which means the activity giving rise to the expense has occurred. Assume the following transactions occurred in January:

1. a. Dell paid its computer service technicians $90,000 in salary for work done in January. Answer from Dell’s standpoint.
2. b. At the beginning of January, Turner Construction Company paid $3,000 in rent for February–April.
3. c. McGraw-Hill Education—publisher of this textbook—used $3,000 worth of electricity and natural gas in January for which it has not yet been billed.
4. d. Pooler Company received and paid in January a $1,500 invoice from a consulting firm for services received in January.
5. e. The campus bookstore received consulting services at a cost of $5,000. The terms indicate that payment is due within 30 days of the consultation.
6. f. Schergevitch Incorporated had its delivery van repaired in January for $280 and charged the amount on account.

Required:

For each of the transactions, if an expense is to be recognized in January, indicate the amount. If an expense is not to be recognized in January, indicate why.