Luton Inc.

Luton Inc. has a year end of December 31 2009.

For each of the following transactions show which figure would be shown in:

Income statement
Cash
Prepayment
Accruals.

1. Purchased a one year software license for $6,000 on November 1 2009.

The payment was made in full on November 1.
2. Paid a three month electricity bill covering the period December 1 to February
28. The bill was for $30,000 and is paid in arrears.
3. Sold a training contract to be delivered on January 31. The course fee is $2,000
which will be payable 30 days after the course. There is also a development fee
of $5,000 payable at the same time as the course fee. The development will
be carried out in December and January and will equal work being done in
both months.

Corporate Finance Institute 33839 1