Requirements 1. Show how each transaction would be handled (in terms of recognizing revenues and expenses) using the cash basis and the accrual basis. 2. Compute May income (loss) before tax under each accounting method. 3. Indicate which measure of net income or net loss is preferable. Use the transactions on May 11 and May 24 to explain. Print Done i 1 More Info .X May 1 4 5 8 11 19 24 Prepaid insurance for May through July, $2,700. Purchased office furniture for cash, $3,000. Performed services and received cash, $1,700. Paid advertising expense, $300. Performed service on account, $3,200. Purchased computer on account, $2,300. Collected for May 11 service. Paid account payable from May 19. Paid salary expense, $1,500. Adjusted for May insurance expense (see May 1). Earned revenue of $400 that was collected in advance back in April. Recorded May depreciation expense on all fixed assets, $160. 26 29 31 31 31 Print Done Masters Consulting had the following selected transactions in May: Click the icon to view the transactions.) Read the requirements. Requirement 1. Show how each transaction would be handled using the cash basis and the accrual basis, Under eich column, give the amount of revenue or expense for May using the cash basis and the accrual basis. (Enter "o" for any transactions that do not affect revenues or expenses. Use parentheses or a minus sign when entering expenses or losses. Round your answers to the nearest whole dollar) Dale Amount of Revenue (Expense) for May Cash Basis Accrual Basis Revenue or (Expense) Revenue or (Expense) 1 4 May 5 B 11 19 24 26 29 31 31 31 Requirement 2. Compute May income (loss) before tax under each accounting method. Income (loss) before tax Requirement 3. Indicate which measure of net income or net loss is preferable. Use the transactions on May 11 and May 24 to explain. The measure of net income is preferable because it accounts for revenues and expenses when they not when they For example, on May 11, the company $3,200 of revenue and increased its wealth as a result. The basis records this revenue, but the basis ignores it. basis records no revenue on May 24 because the company's increase in wealth occurred back on May 11. The basis waits until cash On May 24, the business collected the receivable that was created by the revenue earned on account at May 11. The is received, on May 24, to record the revenue. This is Enter any number in the edit fields and then continue to the next