Chapter 3: Agenda

 Purposes of lecture: From practice back to theory

 PRACTICE:
- Identify some odd transactions in the normal period.
 IMPLIED THEORY: why practice so? Because we have
to comply:
1/Time period assumption (calendar year vs fiscal year)
2/ Accrual basis vs Cash basis
3/ Revenue recognition principle (new – with performance
obligations)
4/ Expenses recognition principle.
 Why do we have to set and apply all the theories from 1
to 4?

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 Journalize some odd transactions
Events (Deferrals or Prepayment) What is the proper
Revenues and Expenses
for the period ended Dec
31?

On December 15 UEL Company received $3,600

cash for consulting services that will be performed
during 3 months from now. Prepare a general
journal entry to record the $3,600 cash receipt.

On October 1 of the current year, UEL Company

paid $9,600 cash for a one-year insurance policy
that took effect on that day. On the date of the
payment, record the entry?

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 Journalize some odd transactions
Events (Deferrals or Prepayment) What is the proper Revenues
and Expenses for the period
ended Dec 31?
UEL Co had $1,500 of store supplies at the
beginning of the current year. During this year,
UEL purchased $8,250 worth of store supplies.
On December 31, $1,125 worth of store supplies
remained. Record the purchases entry?
UEL company purchased a new truck at a cost of
$42,000 on July 1, 2018. The truck is estimated to
have a useful life of 6 years and a
salvage/scrap/residual value of $3,000. The
company uses the straight-line method of
depreciation. Record the purchase and the
depreciation for the year ended December 31,
2018?

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 Journalize some odd transactions
Events (accrued ex and rev) What is the proper
Revenues and Expenses
for the period ended
Dec31?
On Dec 31 UEL Co performed two thirds (2/3) of 3
months consulting services costing $9,000 that will be
paid in January 31. Did UEL receive any cash at Dec
31? And Did u perform the services?
How can we (accountants) help?
UEL company has 20 employees who each earn $500
per week for a 5-day week that begins on Monday and
pay salaries on Friday every week. December 31 of
this year is a Monday, and all 20 employees worked
that day. Did UEL pay salaries on December 31 or
record something? How can we (accountants) help?

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 IN SUMMARY

TIME PERIOD
ASSUMPTIONS

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 IN SUMMARY

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