Masters Consulting had the following selected transactions in July: 1 (Click the icon to view the transactions.) Requirements 1. Show how each transaction would be handled (in terms of recognizing revenues and expenses) using the cash basis and the accrual basis. 2. Compute July income (loss) before tax under each accounting method. 3. Indicate which measure of net income or net loss is preferable. Use the transactions on July 11 and July 24 to explain. Requirement 1. Show how each transaction would be handled using the cash basis and the accrual basis. Under each column, give the amount of revenue or expense for July using the cash basis and the accrual basis. (Enter "0" for any transactions that do not affect revenues or expenses. Use parentheses or a minus sign when entering expenses or losses. Round your answers to the nearest whole dollar.) Amount of Revenue (Expense) for July Cash Basis Accrual Basis Date Revenue or (Expense) Revenue or (Expense) July -2400 -2400 4 -5000 -5000 1500 1500 -500 -500 11 2800 19 -1900 24 2800 26 -1900 29 -1200 -1200 31 900 31 900 29 -1200 -1200 31 900 31 900 31 Requirement 2. Compute July income (loss) before tax under each accounting method. Income (loss) before tax Requirement 3. Indicate which measure of net income or net loss is preferable. Use the transactions on July 11 and July 24 to explain. The V measure of net income is preferable because it accounts for revenues and expenses when they V, not when they For example, on July 11, the company V $2,800 of revenue and increased its wealth as a result. The V basis records this revenue, but the V basis ignores it. On July 24, the business collected the receivable that was created by the revenue earned on account at July 11. The V basis waits until cash is received, on July 24, to record the revenue. This is V basis records no revenue on July 24 because the company's increase in wealth occurred back on July 11. The Enter any number in the edit fields and then continue to the next question. July 1 Prepaid insurance for July through September, $2,400. 4 Purchased office furniture for cash, $5,000. Performed services and received cash, $1,500. 8 Paid advertising expense, $500. 11 Performed service on account, $2,800. 19 Purchased computer on account, $1,900. 24 Collected for July 11 service. 26 Paid account payable from July 19. 29 Paid salary expense, $1,200. 31 Adjusted for July insurance expense (see July 1). 31 Earned revenue of $900 that was collected in advance back in June. 31 Recorded July depreciation expense on all fixed assets, $360.