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    Cash Versus Accrual Net Income

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    Sweet Catering completed the following selected transactions during May 2016:
    May 1: Prepaid rent for three months, $2,100
    May 5: Received and paid electricity bill, $130
    May 9: Received cash for meals served to customers, $830
    May 14: Paid cash for kitchen equipment, $2,500
    May 23: Served a banquet on account, $2,740
    May 31: Made the adjusting entry for rent (from May 1).
    May 31: Accrued salary expense, $300
    May 31: Recorded depreciation for May on kitchen equipment, $440
    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.
    If Sweet Catering had recorded transactions using the Accrual 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.

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    https://brainmass.com/business/the-accounting-cycle/cash-versus-accrual-net-income-637869

    Solution Summary

    This solution illustrates the effect that various transactions have on determining cash or accrual-basis net income.

    $2.19