Tania Angus established Angus’s Phone App Productions in 2018 and kept her accounting records on a cash basis. During 2018, Tania decided to switch her accounting to the accrual basis and has asked you to help her convert the 2018 and 2019 financial statements to an accrual basis. Your analysis of the accounting records revealed the following data.

Required

(a) Using the data, complete abbreviated income statements in the form shown below for the years 2018 and 2019 for both the cash basis and accrual basis of accounting. Show supporting calculations in good form.

(b) Show the differences that would result in the 31 December 2019 balance sheet accounts from using the accrual basis instead of the cash basis.

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Consulting fees revenue Cash collected for apps developed during the year Charged customers for apps developed during the year, but cash was not received until the following year Prepaid revenue collected in 2018 for apps developed in 2019 2018 2019 $159 600 $165300 45 600 8550 57 000 Expenses Cash paid for services received 91 200 96 900 Accrued expenses at end of the year paid for in the following year 39 900 41 600 Prepaid expenses: Cash paid during the year 22 000 34 000 Amount prepaid at the end of the year 17 200 39 800