E3-10 (Algo) Analyzing the Effects of Transactions in T-Accounts and Computing Cash Basis versus Accrual Basis Net Income LO3-3, 3-4

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Stacey's Piano Rebuilding Company has been operating for one year. At the start of the second year, its income statement accounts had zero balances and its balance sheet account balances were as follows:

Cash	$	6,700	Accounts payable	$	9,200
Accounts receivable		30,700	Unearned revenue		2,840
Supplies		1,460	Long-term note payable		47,200
Equipment		10,300	Common stock		1,620
Land		8,000	Additional paid-in capital		6,480
Building		27,300	Retained earnings		17,120

1. Rebuilt and delivered five pianos in January to customers who paid $19,300 in cash.
2. Received a $580 deposit from a customer who wanted her piano rebuilt.
3. Rented a part of the building to a bicycle repair shop; received $830 for rent in January.
4. Received $7,500 from customers as payment on their accounts.
5. Received an electric and gas utility bill for $480 to be paid in February.
6. Ordered $910 in supplies.
7. Paid $2,040 on account in January.
8. Received from the home of Stacey Eddy, the major shareholder, a $920 tool (equipment) to use in the business in exchange for 120 shares of $1 par value stock.
9. Paid $14,700 in wages to employees who worked in January.
10. Declared and paid a $2,600 dividend (reduce Retained Earnings and Cash).
11. Received and paid cash for the supplies in (f).

E3-10 Part 4

4. What is net income if Staceys used the cash basis of accounting?