Reporting Cash Basis versus Accrual Basis Income
Skidmore Music Company had the following transactions in March:
a. Sold instruments to customers for $15,000; received $10,000 in cash and the rest on account. The cost of the instruments was $9,000.
b. Purchased $3.000 of new instruments inventory: paid SI.000 in cash and owed the rest on account.
c. Paid $750 in wages for the month.
d. Received $3,000 from customers as deposits on orders of new instruments to be sold to the customers in April.
e. Received a $200 bill for March utilities that will be paid in April. Complete the following statements:
Cash Basis Income Statement.
| Accrual Basis Income Statement.
| ||
Revenues |
| Revenues |
|
Cash sales |
| Sales to customers |
|
Customer deposits |
| Expenses |
|
Expenses |
| Cost of sales |
|
Inventory purchases |
| Wages expense |
|
Wages paid |
| Utilities expense |
|
Net income | ———— | Net income | ———— |
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