David Bates has managed the Westside Inn for 30 years, and the books have always been kept ona cash basis. Now the Westside’s new owner is requiring that the books be maintained on an accrual accounting basis. Several transactions have been selected to illustrate the differences. The transactions are as follows:

Cash Net Income 1. Sales on account for April 1 total $3,000. $-0- $ 3,000 2. Purchased microcomputer for

$2,500 on April 2.

3. Paid $150 for office supplies on April 3 which are to be expensed.

4, Paid wages of $1,000 on April 4. $700 relates to work performed by the employees in March and is recorded as expense in March.

5. Sold capital stock for $2,500 on April 5.

6. Cash received on account for $1,500 on April 6.

7. Paid the mortgage payment of

$1,500 on April 7. The payment includes $1,000 of interest expense of which $750 was accrued at the end of March.

8. Cash dividend of $500 was paid on April 8.

9. Cash sales of $500 were made on April 9.

10. A travel advance was made to D. Bates for $100 on April 10.

11. Food for resale is purchased on account for $300 on April 11.

Food purchases account is detailed.

12. Equipment is purchased on April 12 for $2,000. Cash of $1,000 is paid and a note payable is signed for the remainder, Required:

Indicate in the columns to the right the impact of each transaction on

(a) cash and

(b) net income for the month of April. Ignore any tax effects of these transactions.