Bombay Foods had the following selected transactions during November:

Required
1. Show how each transaction would be handled using the cash basis and the accrual basis.
Under each column, give the amount of revenue or expense for November. Journal entries are not required. Use the following format for your answer, and show your computations:

2. Compute income (loss) before tax for November under the two accounting methods.
3. Which method better measures income and assets? Use the last transaction to explain.

Transcribed Image Text:

Nov. 1 Received $800 in advance for food to be delivered later. 5 Paid electricity expenses, $700. 9 Received cash for the day's sales, $2,000. 14 Purchased two food warmers, $1,800. 23 Served a banquet, receiving a note receivable, $700 30 Accrued salary expense, $900. 30 Prepaid building rent for December and January, $3,000. Amount of Revenue (Expense) for November Date Cash Basis Accrual Basis