Accrual vs cash basis accounting
M3-2 Reporting Cash Basis versus Accrual Basis Income: LO1, LO2
--------------------------------------------------------------------------------
Mostert Music Company had the following transactions in March:
1. 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.
2. Purchased $4,000 of new instruments inventory; paid $1,000 in cash and owed the rest on account.
3. Paid $600 in wages for the month.
4. Received a $200 bill for utilities that will be paid in April.
5. Received $1,000 from customers as deposits on orders of new instruments to be sold to the customers in April.
Complete the following statements:
