[stmj001]

Accrual Basis of Accounting versus Cash Basis of Accounting
On December 31, Jayne Leigh completed her first year as a financial planner.
The following data are available from her accounting records:

Fees billed to clients for services rendered $97,000
Rent expense for year just ended $10,800
Cash received from clients 85,000
Utility expense incurred 2,500
Supplies purchased for cash 4,500
Utility bills paid 2,200
Supplies used during the year 3,300
Salary earned by assistant 30,000
Cash paid for rent (rent is paid through Feb. of next year) 12,600
Salary paid by assistant 27,500

a. Compute Leigh's net income for the year just ended using the accrual basis of accounting: $Answer

b. Compute Leigh's net income for the year just ended using the cash basis of accounting: $Answer

I know Accrual basis is recorded when the revenue or expense is incurred regardless to when it was received.

I know Net income = Revenue-expenses

Here's my thought's: for accrual method:

For fees billed... Debit A.R. $97,000 and Credit Revenue $97,000
For Rent Expense... Debit Rent expense 10,800 and credit Accounts Payable 10800

Cash Received... Debit cash 85,000 and Credit revenue 85,000
Utility Expense incurred Debit expenses and credit A.P.

Ect etc. Then I would use the Assets=liabilities + Stockholders Equity formula and expand that to

Assets=Liabilities+common stock+Revenues-expenses-dividends and plug in the values under the correct category?

If I am right this one is the one that will create a different total between the two cases but I am not sure if that is the only place I am wrong. Am I totally off base?