Question

Tidys Consulting had the following selected transactions in July: (Click the icon to view the transactions.) Read the requirements July 1 Prepaid insurance for July through September, $2,700 4 Purchased office furniture for cash, $5,500 5 Performed services and received cash, $1,500. 8 Paid advertising expense, $500 11 Performed service on account, $2,700. 19 Purchased computer on account, $2,000. 24 Collected for July 11 service. 26 Paid account payable from July 19 29 Paid salary expense, $900 31 Adjusted for July insurance expense (see July 1). 31 Earned revenue of $700 that was collected in advance back 8 19 26 29 31 31 31 Requirement 2. Compute July income (loss) before tax under each accounting method. in June. 31 Recorded July depreciation expense on all fixed assets $408 PrintDone Income (loss) before tax

Answer 1

Income )loss) before tax under each accounting method is as calculated below:

	Particulars	Amount ($)	Cash Method	Accrual basis
Jul-01	Insurance Prepaid for July through September	-2,700	-2,700	0
Jul-04	Office Furniture purchased	-5,500
Jul-05	Services performed	1,500	1,500	1,500
Jul-08	Paid advertising exp	-500	-500	-500
Jul-11	Performed services on account	2,700	0	2,700
Jul-19	Purchased computer on account	2,000	0	0
Jul-24	Collected for July 11 Service	2,700	2,700	0
Jul-26	Paid accounts payable from July 19	-2,000	0	0
Jul-29	paid Salary Expense	-900	-900	-900
Jul-31	Adjusted for July Insurance	-900	0	-900
Jul-31	Earned Revenue collected in June	700	0	700
Jul-31	Depreciation	-408	0	-408
	Net Income (loss)		100	2,192