Step 5: Activity 1.c

Activity 1.c - Identifying Differences between Cash and Accrual Basis Read each scenario, decide whether the company is using Cash basis or Accrual basis, and then enter your answer to the question. The Orange Lily Law Firm prepays for advertising in the local newspaper. On January 1, the law firm paid $3,690 for six months of advertising. Orange Lily Law Firm recorded $3,690 in the Prepaid Advertising account. Accrual basis if Orange Lily Law Firm had recorded their expenses using the other method, how much advertising expense would they have recorded for the two months ending February 28? Enter this value as a positive number 3690 Secure Home provides house-sitting for people while they are away on vacation. Some of its customers pay immediately after the job is finished. Some customers ask that the business send them a bill. As of the end of the year, Secure Home has collected $2,710 from cash-paying customers. Secure Home's remaining customers owe the business $1,120. Secure Home recorded $2,710 of service revenue for the year. Cash basis If Secure Home had recorded their service revenue using the other method, how much service revenue would they have recorded for the year? 3830 Momentous Occasions received 5610 for services to be performed for the next 8 months on March 31 and recorded this transaction using the Unearned Revenue account. Acer basis IF Momentous Occasions had recorded their service revenue using the other method, how much service revenue would they have recorded for the year? 610 Sweet Catering completed the following selected transactions during May 2016: May 1: Prepaid rent for three months, $2,700 . May 5: Received and paid electricity bill, $220 May 9: Received cash for meals served to customers, $560 May 14: Paid cash for kitchen equipment, $2,140 May 23: Served a banquet on account, $2,270 May 31: Made the adjusting entry for rent (from May 1). May 31: Accrued salary expense, $1,900 May 31: Recorded depreciation for Mayor kitchen equipment, 5210 If Sweet Catering had recorded transactions using the Cash method, how much net income (loss) would they have recorded for the month of May? If there is a loss, enter it with parentheses or a negative sign (2360) If Sweet Catering had recorded transactions using the Accrual method, how much net income (loss) would they have recorded for the month of May? If there is a loss, enter it with parentheses or a negative sign -400