Homework Answers
| Cash basis of accounting | |||
| Sales | $1,100 | (600+500) | |
| EXPENSES | |||
| Insurance expense | $1,800 | ||
| Wages | $950 | ||
| $2,750 | |||
| Net Loss | -$1,650 | ||
| Accrual basis of accounting | |||
| Sales | $1,400 | (800+600) | |
| EXPENSES | |||
| Insurance expense | $900 | (1800/2) | |
| Wages | $1,600 | (950+650) | |
| $2,500 | |||
| Net Loss | -$1,100 | ||
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CASH BASIS VERSUS ACCRUAL BASIS ACCOUNTING (11 Marks) The following transactions for January 2020 are as...
dany 2020 are as follows Ice policy for Cash $1,800. Cash Basis Versus Accrual Basis Accountury...
dany 2020 are as follows Ice policy for Cash $1,800. Cash Basis Versus Accrual Basis Accountury The following transactions for January 2020 aue as Jan1 Purchased a two-year insurance policy for cash. 9 Performed a service on account $ 800. 16 paid wages to employees $950. 18 Completed a job for a Customer and Colleded. $ 600 Cash. 23 collected $500 of the amount owned from May 30 Accoued wages of $ 650. Using the Cash Basts of accounting. Calculate...
Exercise 3 – Accrual vs. cash accounting: Taos Corporation sells beauty products. The company's fiscal year...
Exercise 3 – Accrual vs. cash accounting: Taos Corporation sells beauty products. The company's fiscal year ends on December 31. The following transactions occurred in 2019 (assume no income taxes are incurred): a. Purchased $470,000 of soaps from its supplier on account. b. Paid $61,000 in wages to employees for work performed in 2019. In addition, $94,000 of wages for work performed in 2018 were paid in January 2019, and $7,000 of wages for work performed in December 2019 will...
Discuss the cash basis of accounting versus the accrual basis of accounting. Include * examples and...
Discuss the cash basis of accounting versus the accrual basis of accounting. Include * examples and references to any relevant principles. (3 marks)
Michelle Walker, M.D., maintains the accounting records of Walker Clinic on a cash basis. During 2020,...
Michelle Walker, M.D., maintains the accounting records of Walker Clinic on a cash basis. During 2020, Dr. Walker collected $152,353 from her patients and paid $52,375 in expenses. At January 1, 2020, and December 31, 2020, she had accounts receivable, unearned service revenue, accrued expenses, and prepaid expenses as follows. (All long-lived assets are rented.) January 1, 2020 December 31, 2020 Accounts receivable $8,595 $16,162 Unearned service revenue 3,068 4,456 Accrued expenses 3,320 2,049 Prepaid expenses 2,035 3,078 Prepare a...
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Helen Martin, M.D., maintains the accounting records of Martin Clinic on a cash basis. During 2020, Dr. Martin collected $141,986 from her patients and paid $51,749 in expenses. At January 1, 2020, and December 31, 2020, she had accounts receivable, unearned service revenue, accrued expenses, and prepaid expenses as follows. (All long-lived assets are rented.) January 1, 2020 December 31, 2020 Accounts receivable $9,012 $15,880 Unearned service revenue 2,940 4,440 Accrued expenses 3,247 2,113 Prepaid expenses 1,978 3,353 Prepare a...
Margaret Moore, M.D., maintains the accounting records of Moore Clinic on a cash basis. During 2020,...
Margaret Moore, M.D., maintains the accounting records of Moore
Clinic on a cash basis. During 2020, Dr. Moore collected $132,258
from her patients and paid $50,809 in expenses. At January 1, 2020,
and December 31, 2020, she had accounts receivable, unearned
service revenue, accrued expenses, and prepaid expenses as follows.
(All long-lived assets are rented.)
January 1, 2020
December 31, 2020
Accounts receivable
$9,283
$17,324
Unearned service revenue
2,638
4,517
Accrued expenses
3,723
1,957
Prepaid expenses
1,905
3,397
Prepare a...
Compared to the accrual basis of accounting, the cash basis of accounting overstates income by the...
Compared to the accrual basis of accounting, the cash basis of accounting overstates income by the net increase during the accounting period of the Accounts Receivable Accrued Expenses Payable No No No Yes Yes No Yes No Yes No Yes Yes
Accrual- and Cash-Basis Accounting The following are several transactions for Halpin Advertising Company. a. Purchased $1,000...
Accrual- and Cash-Basis Accounting The following are several transactions for Halpin Advertising Company. a. Purchased $1,000 of supplies. b. Sold $5,000 of advertising services, on account, to customers. c. Used $250 of supplies. d. Collected $3,000 from customers in payment of their accounts. e. Purchased equipment for $10,000 cash. f. Recorded $500 depreciation on the equipment for the current period. Required: Identify the effect, if any, that each of the above transactions would have on net income under cash-basis accounting...
Cash-Basis and Accrual-Basis Accounting The records of Summers Building Company reveal the following information for 2018....
Cash-Basis and Accrual-Basis Accounting The records of Summers Building Company reveal the following information for 2018. a. Cash receipts during 2018 (including $50,000 paid by shareholders in exchange for common shares) were $246,410. b. Cash payments during 2018 (including $14,800 of dividends paid to shareholders) were $164,850. C. Total selling price of services billed to customers during 2018 was $222,300. d. Salaries earned by employees during 2018 were $93,000. e. Cost of supplies used during 2018 in operation of the...
Exercise 2-18 (Algo) Cash versus accrual accounting (LO2-9) Stanley and Jones Lawn Service Company (S&J) maintains...
Exercise 2-18 (Algo) Cash versus accrual accounting (LO2-9) Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $160,000 from a local bank, and the bank requires S&J to provide annual financial statements prepared on an accrual basis. During 2021, the following cash flows were recorded: $380,000 Cash collected for: Services to customers Cash paid for: Salaries Supplies Rent Insurance Miscellaneous Net operating cash flow $186,000 31,000 15,000 12,000 26,000 270,000...
dany 2020 are as follows Ice policy for Cash $1,800. Cash Basis Versus Accrual Basis Accountury The following transactions for January 2020 aue as Jan1 Purchased a two-year insurance policy for cash. 9 Performed a service on account $ 800. 16 paid wages to employees $950. 18 Completed a job for a Customer and Colleded. $ 600 Cash. 23 collected $500 of the amount owned from May 30 Accoued wages of $ 650. Using the Cash Basts of accounting. Calculate...
Exercise 3 – Accrual vs. cash accounting: Taos Corporation sells beauty products. The company's fiscal year ends on December 31. The following transactions occurred in 2019 (assume no income taxes are incurred): a. Purchased $470,000 of soaps from its supplier on account. b. Paid $61,000 in wages to employees for work performed in 2019. In addition, $94,000 of wages for work performed in 2018 were paid in January 2019, and $7,000 of wages for work performed in December 2019 will...
Discuss the cash basis of accounting versus the accrual basis of accounting. Include * examples and references to any relevant principles. (3 marks)
Michelle Walker, M.D., maintains the accounting records of Walker Clinic on a cash basis. During 2020, Dr. Walker collected $152,353 from her patients and paid $52,375 in expenses. At January 1, 2020, and December 31, 2020, she had accounts receivable, unearned service revenue, accrued expenses, and prepaid expenses as follows. (All long-lived assets are rented.) January 1, 2020 December 31, 2020 Accounts receivable $8,595 $16,162 Unearned service revenue 3,068 4,456 Accrued expenses 3,320 2,049 Prepaid expenses 2,035 3,078 Prepare a...
Margaret Moore, M.D., maintains the accounting records of Moore
Clinic on a cash basis. During 2020, Dr. Moore collected $132,258
from her patients and paid $50,809 in expenses. At January 1, 2020,
and December 31, 2020, she had accounts receivable, unearned
service revenue, accrued expenses, and prepaid expenses as follows.
(All long-lived assets are rented.)
January 1, 2020
December 31, 2020
Accounts receivable
$9,283
$17,324
Unearned service revenue
2,638
4,517
Accrued expenses
3,723
1,957
Prepaid expenses
1,905
3,397
Prepare a...
Accrual- and Cash-Basis Accounting The following are several transactions for Halpin Advertising Company. a. Purchased $1,000 of supplies. b. Sold $5,000 of advertising services, on account, to customers. c. Used $250 of supplies. d. Collected $3,000 from customers in payment of their accounts. e. Purchased equipment for $10,000 cash. f. Recorded $500 depreciation on the equipment for the current period. Required: Identify the effect, if any, that each of the above transactions would have on net income under cash-basis accounting...
Cash-Basis and Accrual-Basis Accounting The records of Summers Building Company reveal the following information for 2018. a. Cash receipts during 2018 (including $50,000 paid by shareholders in exchange for common shares) were $246,410. b. Cash payments during 2018 (including $14,800 of dividends paid to shareholders) were $164,850. C. Total selling price of services billed to customers during 2018 was $222,300. d. Salaries earned by employees during 2018 were $93,000. e. Cost of supplies used during 2018 in operation of the...
Exercise 2-18 (Algo) Cash versus accrual accounting (LO2-9) Stanley and Jones Lawn Service Company (S&J) maintains its books on a cash basis. However, the company recently borrowed $160,000 from a local bank, and the bank requires S&J to provide annual financial statements prepared on an accrual basis. During 2021, the following cash flows were recorded: $380,000 Cash collected for: Services to customers Cash paid for: Salaries Supplies Rent Insurance Miscellaneous Net operating cash flow $186,000 31,000 15,000 12,000 26,000 270,000...
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