pasanenl
Feb 21, 2010, 09:59 AM
Reporting Cash Basis versus Accrual Basis Income
Mostert Music Company had the following transactions in March:
a. sold instruments to customers for $10,000; received $6,000 in cash and the rest on account.
The cost of the instruments was $7,000.
b. Purchased $4,000 of new instruments inventory; paid $1,000 in cash and owed the rest on Account.
c. Paid $600 in wages for the month.
d. Received a $200 bill for utilities that will be paid in April.
e. Received $1,000 from customers as deposits on orders of new instruments to be sold to the Customers in April.
Cash Basis Income Accrual Basis Income Stmnt.
Revenues: $3000 Revenues: $3000
Cash Sales: $6000 Sales to Customers: $ 6000
Cust. Dep.: $1000
Expenses: $4000 Expenses: $4000
Inventory Purchases: $1000 Cost of Sales:
Wages Paid: $600 Wages Expenses: $600
Utilities Expense: $200
Cash Income: $4400 Net Income: $4200
Mostert Music Company had the following transactions in March:
a. sold instruments to customers for $10,000; received $6,000 in cash and the rest on account.
The cost of the instruments was $7,000.
b. Purchased $4,000 of new instruments inventory; paid $1,000 in cash and owed the rest on Account.
c. Paid $600 in wages for the month.
d. Received a $200 bill for utilities that will be paid in April.
e. Received $1,000 from customers as deposits on orders of new instruments to be sold to the Customers in April.
Cash Basis Income Accrual Basis Income Stmnt.
Revenues: $3000 Revenues: $3000
Cash Sales: $6000 Sales to Customers: $ 6000
Cust. Dep.: $1000
Expenses: $4000 Expenses: $4000
Inventory Purchases: $1000 Cost of Sales:
Wages Paid: $600 Wages Expenses: $600
Utilities Expense: $200
Cash Income: $4400 Net Income: $4200