Expenses and the Matching Concept}

The following information describes transactions for Morgenstern Advertising Company during July:

a. On July 5, Morgenstern purchased and received \(\$ 24,300\) of supplies on credit from Drexel Supply Ltd. During July, Morgenstern paid \(\$ 20,500\) eash to Drexel and used \(\$ 18,450\) of the supplies.

b. Morgenstern paid \(\$ 9,600\) to salespeople for salaries earned during July. An additional \(\$ 1,610\) was owed to salespeople at July 31 for salaries earned during the month.

c. Morgenstern paid \(\$ 2,950\) to the local utility company for electric service. Electric service in July was \(\$ 2,300\) of the \(\$ 2,950\) total bill.
\section*{Required:}
Calculate the amount of expense recognized in July under

(a) the cash basis of accounting and

(b) the accrual basis of accounting.
Cornerstone Exercise