Ali Grami operates a computer repair service from his home. During April he had the following activity:

i. Ali charged customers \($7,200\) for services he provided during April. He collected

\($6,300\) of the amount charged.

ii. He collected \($1,350\) for services provided in previous months.

iii. A customer paid a \($2,200\) deposit for services Ali will provide later in the year.

iv. Ali purchased goods for \($1,600\) that he used during the month. The goods will be paid for in 60 days.

v. Ali paid \($1,300\) for goods purchased in previous months.
vi. Ali has a part-time employee who earned \($2,000\) during April. The employee was paid \($1,500\) during the month and will receive the remainder in May. The employee also received \($325\) for work done in March.
vii. He purchased and paid for \($800\) of legal services during the month.
viii. Ali estimates depreciation of \($500\) for the month on his equipment, tools, and vehicle.

Required:

Prepare income statements for Ali’s business for April using cash and accrual accounting.
Explain why the two methods result in different amounts of income. Also calculate the gross margin for the business under the accounting methods.