Question

Lay Perfect Pillow Company sells specialty pillows and accessories to customers. Its fiscal year ends on December 31. The following transactions occurred in the current year:

1. Purchased $250,000 of new pillow inventory; paid $90,000 in cash and owed the rest on account.
2. Paid employees $180,300 in wages for work during the year; an additional $3,700 for the current year's wages will be paid in January of the next year.
3. Sold pillows to customers for $750,000; received $500,000 in cash and customers owed the rest on account. The cost of the pillow inventory to Lay Perfect Pillow was $485,000.
4. Paid $17,200 cash for utilities for the year.
5. Received $70,000 from customers as deposits on orders of new pillows to be sold to the customers in January of the next year.
6. Received a $1,930 utilities bill for December of the current year that will be paid in January of the next year.

Complete the following statements

Cash Basis Income Statement	Statement	Accrual Basis Income Statement	Statement
Revenues		Revenues
Cash Sales		Sales to Customers
Customer Deposits
Expenses		Expenses
Inventory Purchase		Cost of Sales
Wages Paid		Wages expense
Utilities paid		Utilities expense
Net Income		Net Income

Answer 1

Cash Basis Income Statement	Statement	Accrual Basis Income Statement	Statement
Revenues		Revenues
Cash Sales	500000	Sales to Customers	750000
Customer Deposits	70000
Total	570000	Total	750000
Expenses		Expenses
Inventory Purchase	90000	Cost of Sales	485000
Wages Paid	180300	Wages expense	184000
Utilities paid	17200	Utilities expense	19130
Total	287500	Total	688130
Net Income	282500	Net Income	61870