Question

just want to see what im doing wrong for some of these questions

JUULI YUUF SWUPS IR Canvas Delore it is due Use the following to answer questions 1-4 A company maintains its records using accrual basis accounting: however, their accountant wants to create a statement of cash flows and needs to determine the cash flow from operating activities. For simplicity, we assume only one expense account (salaries). The following is data gathered from their records. Services provided to customers during the period $700,000 - 700,000 5 70,000 Salaries expense for the period 500,000 Accounts receivable (beginning balance) 32,000 7 4,000 t o Accounts receivable lending balance) 28,000 Salaries payable (beginning balance) 42,000 Salaries payable (ending balance) 44,000 Use T-accounts for ACCOUNTS RECEIVABLE and SALARIES PAYABLE to help answer questions #1&2. NOTE: ALL SERVICES PROVIDED ARE ON ACCOUNT AND SALARIES EXPENSE ARE RECORDED BEFORE THEY ARE PAID. 1. Determine the amount of cash collected from customers during the period: $ 70,000 500,000 2. Determine the amount for cash paid for salaries during the period: $_ Revenus 700,000 Expenses 500,000 3. Determine accrual basis net income for the period: $ 0.00 4,000 4. Determine cash basis net income for the period: $ 4.000 Use the following to answer questions 5-6 Following is a February transaction for a company. Calculate the amount of expense to recognize in February Recorded $20,000 salaries and wages for February, paid $15,000 in February and will pay $5,000 in March. 5. Accrual basis expense: $ 20,000 6. Cash basis expense: $ 15,000 Use the following to answer 7-8 Following is a February transaction for a company. Calculate the amount of revenue to recognize in February In February the company performed $30,000 of services and received $40,000 payment from customers for services performed in February and January. 7. Accrual basis revenue: $ 30,000 8. Cash basis revenue: $ 40.000 Page 3-1 Chapter 3

Answer 1

1. Correct

2. Cash Paid for Salaries 498,000 instead of 500,000 (i.e. 500,000+42,000-44,000)

3. Correct

4. Cash Basis Net Income would be 2,000 instead of 4,000 because there are Salaries payable which is Current liabilities.

5. Correct

6. Correct

7. Correct

8. Correct