Question

i can not find it i dont understand it

. May 1: Prepaid rent for three months, $1,800 May 5: Received and paid electricity bill, $110 • May 9: Received cash for meals served to customers, $3,510 • May 14: Paid cash for kitchen equipment, $3,410 • May 23: Served a banquet on account, $2,080 May 31: Made the adjusting entry for rent (from May 1). • May 31: Accrued salary expense, $3,160 May 31: Recorded depreciation for May on kitchen equipment, $360 If Sweet Catering had recorded transactions using the Cash method, how much net income (loss) would they have recorded for the month of May? If there is a loss, enter it with parentheses or a negative sign. 1800 If Sweet Catering under cash-basis accounting, revenues are recognized when how much net income (loss) wo cash is collected and expenses are recorded when cash is is a loss, enter it with parenthese paid. Examine each transaction and determine the amount of net income/(loss) for the month. 1360

Answer 1

Meal served to customer (Revenue) Less: Rent paid for 3 Months (expense) Less: Electricity bill paid (expense) Net Income/(loss) $3,510 ($1,800) ($110) $1,600

In case of cash method revenue and expense is recorded as per cash basis.

Note:

- Assuming Prepaid rent for 3 month is paid on the same day.

- Cash paid for kitchen equipment will not be recorded in income statement since it is an assets and will be showed in Balance sheet.

- Remaining other transaction are not a cash transaction.

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