The following transactions occurred in January 2013. For each of the transactions if an expense is to be recognized in January, indicate the expense account title and the amount. If an expense is not to be recognized in January, indicate why.
a. Dell pays its computer service technicians $379,500 in salaries for the two weeks ended January 7. Answer from Dell’s standpoint.
b. On January 31, Fucillo Hyundai Inc., determines that it will pay its salespersons $14,470 in commissions related to January sales. The payment will be made in early February. Answer from Fucillo’s standpoint.
c. A new grill is purchased and installed at a Wendy’s restaurant at the end of the day on January 31; a $12,750 cash payment is made on that day
Answers:
a. Salary expense $189,750
b. Commission expense $144,70
c. none
My professor provided us with the above problems and answers. I don’t understand how she got her answers. I don’t know where her answer for part a came from. I don’t know why part b is an expense, I thought there was no expense here because the payment hasn’t been made yet. and I thought there was an expense made for part c. I don’t know why there isn’t. If someone can explain then that would be great! thanks



a. Dell pays its computer service technicians $379,500 in salaries for the two weeks ended January 7. Answer from Dell’s standpoint.
Using accrual accounting, expenses are recognized in the period they were accrued. The full salary payment was for two weeks. Since it is only Jan. 7, half the expense (one week) was accrued in December of the previous month and the other half was accrued in January.
b. On January 31, Fucillo Hyundai Inc., determines that it will pay its salespersons $14,470 in commissions related to January sales. The payment will be made in early February. Answer from Fucillo’s standpoint.
The commissions were accrued in January. It doesn’t matter when they are actually paid. Remember, this is accrual accounting. Expenses are recorded when they actually occur, not when they are paid.
c. A new grill is purchased and installed at a Wendy’s restaurant at the end of the day on January 31; a $12,750 cash payment is made on that day
The purchasing of assets is not an expense. Once the asset is purchased, depreciation expense will accumulate, but the asset itself is not an expense.