Question

Cash Basis vs. Accrual Basis Income

Mostert Music Company had the following transaction inMarch:

a.Sold instruments to customers for $10,000; received$6,000 in cash and the rest on account.The cost of theinstruments 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 paidin April.e.Received $1,000 from customers as deposits on ordersof new instruments to be sold to the customers in April.Complete the following statement:Cash BasisIncomeStatementAccrualBasis Income StatementRevenues:Revenues:CashSales___________Salesto customers_________Customerdeposits___________Expenses:Expenses:Inventorypurchases__________Costof sales__________Wagespaid__________Wagesexpense__________Utilitiesexpense__________CashIncome___________(dbl underline)Netincome_________(dbl underline)

Solutions

Expert Solution
No answers


Submit Your Answer