CT Has Been Using the "Expense as Incurred" Approach in Recording

question 146

Essay

CT has been using the "expense as incurred" approach in recording ordinary repairs. For 2013, CT decided to use the allocation approach on an annual basis. Estimated expenditures for ordinary repairs for the year 2013 were $6,000. Actual cash expenditures for ordinary repairs for January 2013 were $550. Give the indicated journal entries for January 2013.

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Definitions:

Hierarchy of Authority

A system in organizations where individuals are ranked according to their roles and responsibilities, establishing a clear line of command from top to bottom.

Formal Structure

The officially designated arrangement of roles and responsibilities within an organization, typically outlined in organizational charts and documents.

Unity of Command

A principle stating that each employee should report to one and only one manager to avoid confusion and conflict.

Managerial Authority

The power vested in managers to make decisions and direct resources to achieve organizational goals.