Homework Answers
Under accural basis of accounting revenue should be recognised in the period in which service is provided and it is earned irrespective of cash receipt and expenses should be recognised in the period in which it is incurred irrespective of cash payment.
Net income:
= Revenue earned - Expense incurred
= $992,000 - $388,000
= $604,000
Option a.
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Mostert Music Company had the following transactions in March: a. Sold music lessons to customers for $12,350; received $7,750 in cash and the rest on account. b. Paid $720 in wages for the month. C. Received a $260 bill for utilities that will be paid in April. d. Received $2,700 from customers as deposits on music lessons to be given in April. Based on the information above, prepare a cash basis and an accrual basis income statement. Complete this question...
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