Fantastic Catering completed the following selected transactions during May 2016:
May 1 Prepaid rent for three months, $1,800.
5 Received and paid & electricity bill, $200.
9 Received cash for meals served to customers, $1,900.
14 Paid cash for kitchen equipment, $3,300
23 Served a banquet on account, $3,600.
31 Made the adjusting entry for rent (from May 1).
31 Accrued salary expense, $1,300
31 Recorded depreciation for May on kitchen equipment, $55
Requirements
1. Show whether each transaction would be handled as a revenue or an expense using both the cash basis and accrual basis accounting systems by completing the following table (Expenses should be shown in parentheses ) Aiso, indicate the dollar amount of the revenue or expense The May 1 transaction has been completed as an example

2. After completing the table, calculate the amount or net income or net loss for Fantastic
Citing under the accrual basis and cash basis accounting systems for May
3. Conceding your results from Requirement 2, which method gives the best picture of the true earnings of Fantastic Catering Why?

Transcribed Image Text:

Amount of Revenue (Expense) for May Cash Basis Amount of Accrual Basis Amount of Date Revenue (Expense) Revenue (Expense) S(1,800) 50 May 1