Helping Hands uses accrual basis accounting. For which of the events above should an expense be recorded in May? In each case, how much expense should be recorded? If an event does not involve and expense, specify why not.
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The local chapter of Helping Hands, a social service organization, had the following economic events occur during the month of May.
1) A luncheon honoring volunteers was held at a cost of $950. By month end the bill hadn't been received or paid.
2) New letterhead and envelopes were printed at a cost of $625 and paid for. The new items will not be used, however, until the old supply is exhausted sometime in June.
3) The executive director was paid her usual salary of $3,800 during May.
4) The supplier, who charged $10,175, delivered prizes, ribbons, and awards for events upcoming in June. The amount was paid in cash.
5) The electric bill for April totaled $163 and was paid in full.
6) Radio, TV, and newspaper advertising related to a special fund-raising campaign ran during May. The $7,550 cost had been paid in April.
Helping Hands uses accrual basis accounting. For which of the events above should an expense be recorded in May? In each case, how much expense should be recorded? If an event does not involve and expense, specify why not.© BrainMass Inc. brainmass.com March 4, 2021, 5:40 pm ad1c9bdddf
1. The luncheon needs to be recorded as an expense. Since the luncheon (and therefore its costs) occurred in May the amount recorded should be $950.
2. No expense will be recorded for the new letterhead and ...
This solution looks at when expenses would be recorded and when an event involved an expense or not.