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Fred's Catering had the following selected transactions during May 2018: May 1Received $800 in advance for banquet to be served later May 5Paid electricity expenses,

Fred's Catering had the following selected transactions during May 2018:

May 1Received $800 in advance for banquet to be served later

May 5Paid electricity expenses, $700

May 9Received cash for 2 days sales, $2,000

May 14 Purchased 2 food warmers, $1,800

May 23 Served a banquet, receiving note receivable, $700

May 31 Accrued salary expense, $900

May 31 Prepaid $3,000 building rent for June and July

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 May. Journal entries are not required.Use the following format for your answer, and show your computations.Ignore depreciation.

Fred's Catering

Amount of revenue (Expense) for May 2018

DateCash BasisAccrual Basis

2.Compute income (loss) before tax for May under the two accounting methods

3.Which method better measures income and assets?Use the last transaction to explain.

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