Question

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 the net Income (Loss) for January 2000 . - using Accrual Basis of accounting, calculate the Net income Class) for January 2006.

Answer 1

Income Statement ( Cash basis)
Cash receipts:
Cash receipts from customer	1,100
Cash payments:
Insurance	-1,800
Wages	-950
Net loss	-$1,650

Income Statement ( Accrual Basis)
Service revenue on account	300
Service revenue in cash	1,100
Total revenue	1,400
Expenses:
Insurance expense	-75
Wages expense	-1,600
Net Loss	-$275

Insurance expense for 2 year = $1,800

Insurance expense of 1 month = 1,800/24

= $75

Wages expense = Wages paid in cash + Wages accrued

= 950+650

= $1,600

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