1. In its first year of operations, Sunland Company recognized $31,920 in service revenue, $6,840 of which was on account and still outstanding at year-end. The remaining $25,080 was received in cash from customers. The company incurred operating expenses of $18,012. Of these expenses, $13,680 were paid in cash; $4,332 was still owed on account at year-end. In addition, Sunland prepaid $2,736 for insurance coverage that would not be used until the second year of operations. (a) Calculate the first years net earnings under the cash basis of accounting, and calculate the first years net earnings under the accrual basis of accounting.

		Cash Basis		Accrual Basis
Net Income		$enter net income in dollars		$enter net income in dollars

(b) Which basis of accounting (cash or accrual) provides more useful information for decision-makers?

2. On July 1, 2022, Sunland Co. pays $13,920 to Oriole Company for a 2-year insurance contract. Both companies have fiscal years ending December 31. For Sunland Co., enter the July 1 transaction and the December 31 adjustment in the tabular summary that follows. (If a transaction results in a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)

	Assets			=	Liabilities	+	Stockholders Equity
	Cash		Prepd. Ins.	=			Com. Stock	+	Rev.		Exp. (Ins.)		Div.
Jul. 1	enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Dec. 31	enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
Adj. Bal.	enter the adjusted balance amount		enter the adjusted balance amount		enter the adjusted balance amount		enter the adjusted balance amount		enter the adjusted balance amount		enter the adjusted balance amount		enter the adjusted balance amount