BIC, Inc., completed the following transactions during June, 2022: June 1Prepaid rent for June through September, $3,600. 2Purchased computer for cash, $900. 3Performed catering services on account, $2,300. 5Paid Internet service provider invoice, $100. 6Catered wedding event for customer and received cash, $1,500. 8Purchased $150 of supplies on account. 10Collected $1,200 on account. 14Paid account payable from June 8. 15Paid salary expense, $1,200. 30Recorded adjusting entry for rent (see June 1). 30Recorded $25 depreciation on computer. 30There are $40 of supplies still on hand.

Requirements:

1. Prepare journal entries for each transaction.

2. Using the journal entries as a guide, show whether each transaction would be handled as a revenue or an expense using both the accrual and cash basis by completing the following table.

3. After completing the table, calculate the amount of net income or net loss for BIC under the accrual and cash basis for May.

4. Considering your results from Requirement 3, which method gives the best picture of the true earnings of BIC? Why?