1. During March, Marc Graham’s business performed services for a specific customer for which the fee was $10 000. Payment was received in the following April.

(a) Was the revenue earned in March or April?

(b) What account should be debited in (i) March and (ii) April?

2. During the month a business received $160 000 in cash and paid out $120 000 in cash. Does this indicate that the business earned $40 000 during the month? Explain.

3. Sullivan Sole Traders purchased a 3-year insurance contract on 1 March. The business debited the entire cost of $18 000 to Insurance Expense. The financial year ends on 30 June. Under the accrual system, what is the correct expense for the current year, and what entry would be made to correct the accounts? Under the cash basis of accounting, what is the correct expense and the correct adjusting entry (if any)?