Cash-Basis and Accrual-Basis Income

George Hathaway, an electrician, entered into an agreement with a real estate management company to perform all maintenance of basic electrical systems and air-conditioning equipment in the apartment buildings under the company's management. The agreement, which is subject to annual renewal, provides for the payment of a fixed fee of $6,576 on January 1 of each year plus amounts for parts and materials billed separately at the end of each month. Amounts billed at the end of one month are collected in the next month. During the first three months of 2013, George makes the following additional billings and cash collections:

	Billings for		Cash Paid for	Cost of Parts
	Parts and	Cash	Parts and	and Materials
	Materials	Collected	Materials	Used
January	$510	$6,530*	$375	$360
February	0	465	280	270
March	380	0	395	330

*Includes $110 for parts and materials billed in December 2012.

Required:

Note: Enter a loss as a negative number.

1. Calculate the amount of cash-basis income reported for each of the first three months.

January
February
March

2. Calculate the amount of accrual-basis income reported for each of the first three months.

January
February
March