Part A (4 Marks)

Seven Seas Studios is a photography business that films videos on business occasions. In its first year of operations, Seven Seas Studios generated revenue of $317,000 for services provided, $145,600 of which was on account and still outstanding at the year-end at 30 June 2021. Seven Seas Studios also received $20,000 cash in advance on 26 June 2021 for filming a major corporate event in August 2021.

How much service revenue would Seven Seas Studios has at the year ended 30 June 2021 under:

a) the cash basis of accounting? Show calculation. (2 Marks)

b) the accrual basis of accounting? Show calculation. (2 Marks)