Luton Inc. has a fiscal year ending December 31, 2009. For transactions in November and December 2009: 1) A $6,000 one-year software license purchased on November 1 would show as a prepayment on the balance sheet; 2) A $30,000 electricity bill paid in arrears for December-February would show as an accrual on the balance sheet; 3) A $2,000 training fee and $5,000 development fee from a January course, payable in 30 days, would show the $2,000 as accrued revenue and $5,000 split between prepayments and accrued expenses on the balance sheet.
Luton Inc. has a fiscal year ending December 31, 2009. For transactions in November and December 2009: 1) A $6,000 one-year software license purchased on November 1 would show as a prepayment on the balance sheet; 2) A $30,000 electricity bill paid in arrears for December-February would show as an accrual on the balance sheet; 3) A $2,000 training fee and $5,000 development fee from a January course, payable in 30 days, would show the $2,000 as accrued revenue and $5,000 split between prepayments and accrued expenses on the balance sheet.
Luton Inc. has a fiscal year ending December 31, 2009. For transactions in November and December 2009: 1) A $6,000 one-year software license purchased on November 1 would show as a prepayment on the balance sheet; 2) A $30,000 electricity bill paid in arrears for December-February would show as an accrual on the balance sheet; 3) A $2,000 training fee and $5,000 development fee from a January course, payable in 30 days, would show the $2,000 as accrued revenue and $5,000 split between prepayments and accrued expenses on the balance sheet.
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.
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