Question

For each transaction below, calculate the amount of expense to be recognized in the current period using accrual-basis accounting:

a. Paid $3,300 on account for supplies purchased last period. All supplies were used last period.
b. Paid $6,400 cash for advertising for the current period. c. Employees worked in the current period but will not be paid until the following period, $5,100.

Answer 1

Answer and Explanation:

a. According to the given situation expense to be recorded of $3,300, as the expense is equivalent to supplies used during the period that is $3,300.

b. According to the given situation expense to be recognized as $6,400 because advertising expense is for the current period is equivalent to cash paid.

c. Expense to be recognized i.e.  $5,100 as the salaries are not paid still, here the expense is getting ‘accrued’ in the accrual method and recognized as an expense for the present period.