Question

7000 Chapter 3 Homework Submit your answers in Canvas before it is due 513,000 142 on Use the following to answer questions 1-4 44,000 A company maintains its records using accrual basis accounting: however, their accountant wants to create a statement of cash flows and needs to determine the cash flow from operating activities. For simplicity, we assume only one expense account salaries). The following is data gathered from their records. SZE A /R $700,000 500.000 32,000 500,000 Services provided to customers during the period Salaries expense for the period Accounts receivable (beginning balance) Accounts receivable (ending balance) Salaries payable (beginning balance) Salaries payable (ending balance) .000 28,000 32.000 44,000 25000 42,000 Use T-accounts for ACCOUNTS RECEIVABLE and SALARIES PAYABLE to help answer questions 1&2. NOTE: ALL A SERVICES PROVIDED ARE ON ACCOUNT AND SALARIES EXPENSE ARE RECORDED BEFORE THEY ARE PAID. 1. Determine the amount of cash collected from customers during the period: $_ 34,000 700,000 4000 704,000 2. Determine the amount for cash paid for salaries during the period: $__ 3. Determine accrual basis net income for the period: $ »,000 4. Determine cash basis net income for the period:$__ ,000 Use the following to answer questions 5-6 Following is a February transaction for a company. Calculate the amount of expense to recognize in February Recorded $20,000 salaries and wages for February, paid $15,000 in February and will pay $5,000 in March. 5. Accrual basis expense: $ 6. Cash basis expense: $_ Use the following to answer 7-8 Following is a February transaction for a company. Calculate the amount of revenue to recognize in February In February the company performed $30,000 of services and received $40,000 payment from customers for services performed in February and January. 7. Accrual basis revenue: $_ 8. Cash basis revenue: $ Page 3-1 Chapter 3

Answer 1

1.

Accounts Receivable
Beginning Balance	32,000.00	Cash Collected	704,000.00
Services Provided to Customers	700,000.00	Ending Balance	28,000.00

2.

Salaries Payable
Salaries Paid	498,000.00	Beginning Balance	42,000.00
Ending Balance	44,000.00	Salaries Expense	500,000.00

3.Net income = 700,000 - 500,000 = 200,000

4.Net income = 704,000 - 498,000 = 206,000

5.20,000

6. 15,000

7.30,000

8. 40,000