Question

Financial Reporting Theory Cash vs. Accrual You are provided the following information for the Del Campo Consulting Associates. Assume that all supplies purchased were used in operations in the year of purchase. Rental payments pertain to rental space used in the year of payment. 2019 2018 Service revenue (accrual basis) $250,000 $185,000 Cash collected from clients 97,000 80,000 Operating expenses: Salary expense (accrual basis) 12,000 16,500 Purchased supplies for cash Purchased supplies on account 4,000 2,500 1,000 1,500 Depreciation expense 2,000 2,000 Rent paid in cash Prepaid insurance 7,000 3,000 5,500 Use the blue shaded areas on the ENTERANSWERS tab for inputs. Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instructions tab you will be marked wrong.

Answer 1

INCOME STATEMENT OF DEL CAMPO FOR 2019 AND 2018
	Accrual Basis		Cash Basis
	2019	2018	2019	2018
Income
Revenue	250,000.00	185,000.00	80,000.00	97,000.00
	250,000.00	185,000.00	80,000.00	97,000.00
Operating Expenses
Salary	12,000.00	16,500.00	-	-
Purchases	5,500.00	3,500.00	4,000.00	2,500.00
	[4000+1500]	[2500+1000]
Depreciation	2,000.00	2,000.00	-	-
Rent	7,000.00	3,000.00	7,000.00	3,000.00
Insurance	-	-	5,500.00	-
	26,500.00	25,000.00	16,500.00	5,500.00
Operating Income	223,500.00	160,000.00	63,500.00	91,500.00
Operating Cash Flow for 2019 and 2018
		2019	2018
Cash Collected from clients		80,000.00	97,000.00
(-) Cash paid towards purchases		(4,000.00)	(2,500.00)
(-) Cash paid towards Rent		(7,000.00)	(3,000.00)
(-) Cash paid towards Insurance		(5,500.00)
Net Cash flow from operations		63,500.00	91,500.00