In class Discussion Problem Cash Basis versus Accrual Basis Net Income Stacey's Piano Rebuilding Company has been operating for one year (2013). At the start of 2014, its income statement accounts had zero balances and its balance sheet account balances were as follows: Required: T-accounts for the balance sheet accounts above, and for these additional accounts: Rebuilding Fees Revenue, Rent Revenue, Wages Expense, and Utilities Expense, are provided. The following transactions were subsequently recorded in the T-accounts in 2014 using each transaction's letter as the reference. The trial balance for the year ended 2014 is provided as well. a. Rebuilt and delivered five pianos in January to customers who paid $19,000 incash. b. Received a $600 deposit from a customer who wanted her piano rebuilt. c. Rented a part of the building to a bicycle repair shop; received $850 for rent inJanuary. d. Received $7,200 from customers as payment on their accounts. e. Received an electric and gas utility bill for $400 to be paid inFebruary. f. Ordered $960 in supplies. g. Paid $2,300 on account in January. h. Received from the home of Stacey Eddy, the major shareholder, a $920 tool(equipment) to use in the business in exchange for 100 shares of $1 par value stock. i. Paid $16,500 in wages to employees who worked in January. j. Declared and paid a $2,200 dividend. k. Received and paid cash for the supplies in (f). REQUIRED: 1. What is Stacey's Piano Rebuilding Companys net income using the accrual basis of accounting? 2. What is Stacey's Piano Rebuilding Companys net income using the cash basis of accounting? 3. Explain the differences between the two net incomes. Req. 1 and 2 Cash Accounts Receivable Supplies Equipment Land Building Accounts Payable Unearned Fee Revenue Note Payable Common Stock Additional Paid-in Capital Retained Earnings Rebuilding Fees Revenue Rent Revenue Dividends Wages Expense Utilities Expense Item (f) is not a transaction; there has been no exchange. Beg. 6,400 (a) 19,000 (b) 600 (c) 850 (d) 7,200 2,300 (g) 16,500 (i) 2,200 (j) 960 (k) 12,090 Beg.32,000 7,200 (d) 24,800 Beg. 1,500 (k) 960 2,460 Beg. 9,500 (h) 920 10,420 Beg. 7,400 7,400 Beg. 25,300 25,300 (g) 2,300 9,600 Beg. 400 (e) 7,700 3,840 Beg. 600 (b) 4,440 48,500 Beg. 48,500 1,600 Beg. 100 (h) 1,700 7,000 Beg. 820 (h) 7,820 11,560 Beg. ? NI ? 0 Beg. 19,000 (a) 19,000 Beg. (c) 850 (j) 2,200 Beg. 0 (i) 16,500 16,500 0 400 400 Stacey's Piano Rebuilding Company Trial Balance December 31 2014 Debits Credits Cash $12,090 A/c Receivable 24,800 Supplies 2,460 Equipment 10,420 Land 7,400 Building 25,300 Accts. Payable $ 7,700 Unearned Revenue 4,440 Notes Payable 48,500 Common Stock $ 1,700 Add. Paid-in cap. 7,820 R/Earnings 11,560 Revenues-Fees 19,000 Revenues Rent 850 Wages Expense 16,500 Utilities Expense 400 Dividends 2,200 Totals $101,570 $101,570 1. Income Statement Accrual Basis 2. Income Statement Cash Basis 3.Explain the differences between Stacey's Pianos accrual and cash net incomes?