a. Record each of the following transactions on (1) the cash basis, (2) the modified accrual basis, and (3) the accrual basis.

January 1 Billed customers $4,000 for services rendered.

3 Purchased $500 of supplies on account.

5 Purchased a truck costing $30,000 (to be paid for on February 3).

11 Collected $2,000 from customers on account.

15 Recorded accrued wages to date, $3,000.

17 Paid for supplies.

21 Paid wages.

February 3 Paid for the truck.

5 $200 of supplies have been used.

6 Depreciation on the truck for the month was $500.

b. Explain the similarities and differences between the modified accrual and accrual bases ofaccounting.

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