ACCRUAL- AND CASH-BASIS REVENUE McDonald Music sells used CDs for $2.00 each. During the month of April, McDonald Music sold 21,200 CDs for cash and 7,300 CDs on credit. McDonald’s cash collections in April included the $42,400 for the 21,200 CDs sold for cash, $11,800 for CDs sold on credit during the previous month, and $8,100 for CDs sold on credit during April.

Required:

Calculate the amount of revenue recognized in April under

(a) the cash-basis of accounting and

(b) the accrual-basis of accounting.

Cornerstone Exercise