Question
I've completed all the questions except for one. The question is below along with a screenshot of all the information: 1. Rather than using a
I've completed all the questions except for one. The question is below along with a screenshot of all the information:
1. Rather than using a cash basis of accounting, what if Christys Lemonade Stand measured income using an accrual basis of accounting. What would the daily income of Christys Lemonade Stand be using this method?
I'm confused because I know that income is revenue - expenses, and Christy only generates revenue on one day but is incurring expenses on all three days. So, does that mean that for 2/3 days her income will just be negative or zero? For the first day I got revenue = 0 and expenses = 1 (NI = -1), day two is R = 27 and E = 16 (NI = 11), and the final day R = 0 and E = 0 (NI = 0). Can someone let me know if this is correct?
Text in image (of importance):
On the way home, Christy asks if she can set up a lemonade stand next Saturday. Her Uncle Eldon, who likes to build things with wood, offers to build her a lemonade stand if she can pay him for the materials (about $10, he thinks), plus $1 for his labor. Her little brother, Andy, offers to help out, and Christy agrees to pay him $2 to be her assistant. The next Friday, Christys Mom estimates the amount of lemonade mix and other supplies she will need if she sells 80 cups of lemonade. Christy gets $15 from her piggy bank, and then goes to the grocery store with Mom. They buy the items on Moms list for $10. When they arrive home, they find that Uncle Eldon has delivered the lemonade stand. It has a counter, a sign that says Lemonade 25 and a bench for Christy to sit on. Christys Dad says that she can use this stand every Saturday for the rest of the summer, or a total of 11 Saturdays. Uncle Eldon has already left, but has told Dad that he will be there at 9:00 a.m. tomorrow to fill his jug with lemonade before he goes fishing, and that he will collect the $11 for the lemonade stand sometime after he gets home Sunday afternoon. While they are setting up the stand in the front yard, Cousin Rex drops by. After Christy tells Rex what she is planning to do, he gives her a dollar and says he will bring his family around the next day for 4 cups of lemonade. Christy counts her money. She has already earned $6 from her business, and she hasnt even started working yet! SATURDAY Saturday turns out to be a typical, hot summer day. Christys house is strategically located across from a schoolyard that is busy all day long with soccer, baseball and basketball games. She serves her first four cups to Uncle Eldon at 9:00 a.m. for $1. During the remainder of the day, business is brisk, and Christy serves 100 more cups of lemonade, including four to Cousin Rex and his family. At 2:00 p.m. Dad takes $6 from her shoebox to the store to buy more lemonade ingredients. At the end of the day, Christy counts the money in her shoebox. It comes to $24. Andy asks for his $2, but she promises to pay him the next day. She has $3 worth of lemonade ingredients left over to use the following week. In addition, a neighbor, Mr. Lee, owes her $1 for four cups she served to his family after he promised to pay her the next day. EPILOGUE Early on Sunday, Mr. Lee stops by to pay Christy his $1. Christy then pays Andy his $2 in wages. After lunch, Christy takes $4 from her shoebox to the store to buy a toy. Uncle Eldon stops by later that afternoon, and Christy pays him the $11 for the lemonade stand.
business sciling lemonade and shows Christy a shocox full of dollar quarters On the way home, Christy asks if she can set up a lemonade stund next Saturday. Her Uncle Eldon, who likes to build things with wood, offers to build her a lemonade stand if she can pay him for the materials (about $10, he thinks), plus $1 for his labor. Her little brother, Andy, offers to help out, and Christy agrees to pay him $2 to be her assistant. The next Friday, Christy's Mom estimates the amount of lemonade mix and other supplies she will need if she sells 80 cups of lemonade. Christy gets $15 from her piggy bank, and then goes to the grocery store with Mom. They buy the items on Mom's list for $10. When they arrive home, they find that Uncle Eldon has delivered the lemonade stand. It has a counter, a sign that says "Lemonade - 25e" and a bench for Christy to sit on. Christy's Dad says that she can use this stand every Saturday for the rest of the summer, or a total of 11 Saturdays. Uncle Eldon has already left, but has told Dud that he will be there at 9:00 u.m. tomorrow to fill his jug with lemonade before he goes fishing, and that he will collect the Sul for the lemonade stand sometime after he gets home Sunday afternoon. While they are setting up the stand in the front yard, Cousin Rex drops by. After Christy tells Rex what she is planning to do, he gives her a dollar and says he will bring his family around the next day for 4 cups of lemonade. Christy counts her money. She has already carnod S6 from her business, and she hasn't even started working yet! SATURDAY Saturday turns out to be a typical, hot summer day. Christy's house is strategically located across from a schoolyard that is busy all day long with soccer, baseball and basketball games. She serves her first four cups to Uncle Eldon at 9:00 a.m. for Sl. During the remainder of the day, business is brisk, and Christy serves 100 more cups of lemonade, including four to Cousin Rex and his family. At 2:00p.m. Dad takes S6 from her shoebox to the store to buy more lemonade ingredients. At the end of the day, Christy counts the money in her shocbox. It comes to $24. Andy asks for his $2, lvut she promises to pay him the next day. She has $3 worth of lemonade ingredients left over to use the following week. In addition, a neighbor, Mr. Loc, owes her $1 for four cups she served to his family after he promised to pay her the next day. EPILOGUE Early on Sunday, Mr. Lee stups by to pay Christy his $1. Christy then pays Andy his $2 in wages. After lunch, Christy takes $4 from her shvebox to the store to buy a toy. Uncle Eldon stops by later that afternoon, and Christy pays him the $11 for the lemonade standStep by Step Solution
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