P3-31A: Tee?s Golf School completed the following transactions during January: Cash basis versus accrual basis Jan. 1 Prepaid insurance for January through March, $300 4 Performed service (gave golf lessons) on account, $2,200 5 Purchased equipment on account, $1,900 8 Paid property tax expense, $450 11 Purchased office equipment for cash, $800 19 Performed service and received cash, $700 24 Collected $400 on account 26 Paid account payable from January 5 29 Paid salary expense, $900 31 Recorded adjusting entry for January insurance expense (see Jan. 1) 31 Debited unearned revenue and credited revenue to adjust the accounts, $600 1. Show how each transaction would be handled using the accrual basis of accounting. Give the amount of revenue or expense for January. Journal entries are not required. Use the following format for your answer, and show your computations: Amount of Revenue (Expense) for January Date Revenue (Expense) Accrual-Basis Amount of Revenue (Expense) 2. Compute January net income or net loss under the accrual basis of accounting. (Challenge) 3. State why the accrual basis of accounting is preferable to the cash basis.

P3-31A (15-20 min.) Date: Jan. Req. 2 Req. 3 Revenue (Expense) 1 4 5 8 11 19 24 26 29 31 31 Accrual-Basis Amount of Revenue (Expense