Homework Help is Here – Start Your Trial Now!
Business
Accounting
M3-2 (Algo) Reporting Cash Basis versus Accrual Basis Income LO3-3 Skidmore Music Company had the following transactions in March: a. Sold instruments to customers for $16,300; received $10,200 in cash and the rest on account. The cost of the instruments was $7,200. b. Purchased $4,500 of new instruments inventory; paid $1,100 in cash and owed the rest on account. c. Paid $620 in wages to employees who worked during the month. d. Received $4,900 from customers as deposits on orders of new instruments to be sold to the customers in April. e. Received a $250 bill for March utilities that will be paid in April. Complete the following statements: Cash Basis Income Statement Accrual Basis Income Statement Revenues Cash sales Sales to customers Customer deposits Inventory purchases Cost of sales Wages paid Wages expense Utilities expense Revenues Expenses Net income Expenses Net income

M3-2 (Algo) Reporting Cash Basis versus Accrual Basis Income LO3-3 Skidmore Music Company had the following transactions in March: a. Sold instruments to customers for $16,300; received $10,200 in cash and the rest on account. The cost of the instruments was $7,200. b. Purchased $4,500 of new instruments inventory; paid $1,100 in cash and owed the rest on account. c. Paid $620 in wages to employees who worked during the month. d. Received $4,900 from customers as deposits on orders of new instruments to be sold to the customers in April. e. Received a $250 bill for March utilities that will be paid in April. Complete the following statements: Cash Basis Income Statement Accrual Basis Income Statement Revenues Cash sales Sales to customers Customer deposits Inventory purchases Cost of sales Wages paid Wages expense Utilities expense Revenues Expenses Net income Expenses Net income

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Topic Video
Question
### M3-3 (Static) Identifying Revenues LO3-2, 3-3 The following transactions are July activities of Bennett's Bowling, Inc., which operates several bowling centers, offering customers lanes for games and merchandise for sale. 1. Bennett's collected $15,000 from customers for games played in July. 2. Bennett's sold bowling merchandise inventory from its pro shop for $800; received $300 in cash and customers owed the rest on account. (Consider only the effect on revenue here.) 3. Bennett's received $400 from customers who purchased merchandise in June on account. 4. The men’s and ladies’ bowling leagues gave Bennett's a deposit of $2,500 for the upcoming fall season. If revenue is not recognized in July, choose 'None' for the account affected. If revenue is to be recognized in July, indicate the revenue account title and amount. --- #### Table: Revenue Account Affected and Amount of Revenue | | Revenue Account Affected | Amount of Revenue | |-------|---------------------------|-------------------| | **a.** | | | | **b.** | | | | **c.** | | | | **d.** | | | - **a.** Bennett's collected $15,000 from customers for games played in July. - **b.** Bennett's sold bowling merchandise inventory from its pro shop for $800; received $300 in cash and customers owed the rest on account. - **c.** Bennett's received $400 from customers who purchased merchandise in June on account. - **d.** The men’s and ladies’ bowling leagues gave Bennett's a deposit of $2,500 for the upcoming fall season. --- This table allows you to analyze which revenues are recognized in July and ensure proper recording in the revenue accounts. The entries should reflect the accurate financial performance of Bennett's Bowling, Inc. for the month of July.
Transcribed Image Text:### M3-3 (Static) Identifying Revenues LO3-2, 3-3 The following transactions are July activities of Bennett's Bowling, Inc., which operates several bowling centers, offering customers lanes for games and merchandise for sale. 1. Bennett's collected $15,000 from customers for games played in July. 2. Bennett's sold bowling merchandise inventory from its pro shop for $800; received $300 in cash and customers owed the rest on account. (Consider only the effect on revenue here.) 3. Bennett's received $400 from customers who purchased merchandise in June on account. 4. The men’s and ladies’ bowling leagues gave Bennett's a deposit of $2,500 for the upcoming fall season. If revenue is not recognized in July, choose 'None' for the account affected. If revenue is to be recognized in July, indicate the revenue account title and amount. --- #### Table: Revenue Account Affected and Amount of Revenue | | Revenue Account Affected | Amount of Revenue | |-------|---------------------------|-------------------| | **a.** | | | | **b.** | | | | **c.** | | | | **d.** | | | - **a.** Bennett's collected $15,000 from customers for games played in July. - **b.** Bennett's sold bowling merchandise inventory from its pro shop for $800; received $300 in cash and customers owed the rest on account. - **c.** Bennett's received $400 from customers who purchased merchandise in June on account. - **d.** The men’s and ladies’ bowling leagues gave Bennett's a deposit of $2,500 for the upcoming fall season. --- This table allows you to analyze which revenues are recognized in July and ensure proper recording in the revenue accounts. The entries should reflect the accurate financial performance of Bennett's Bowling, Inc. for the month of July.
**M3-2 (Algo) Reporting Cash Basis versus Accrual Basis Income LO3-3** Skidmore Music Company had the following transactions in March: a. Sold instruments to customers for $16,300; received $10,200 in cash and the rest on account. The cost of the instruments was $7,200. b. Purchased $4,500 of new instruments inventory; paid $1,100 in cash and owed the rest on account. c. Paid $620 in wages to employees who worked during the month. d. Received $4,900 from customers as deposits on orders of new instruments to be sold to the customers in April. e. Received a $250 bill for March utilities that will be paid in April. **Complete the following statements:** The following table outlines the categorization of revenues and expenses into cash basis and accrual basis income statements: | | Cash Basis Income Statement | Accrual Basis Income Statement | |------------------------------|-----------------------------|--------------------------------| | **Revenues** | | | | Cash sales | | Sales to customers | | Customer deposits | | | | **Expenses** | | | | Inventory purchases | | Cost of sales | | Wages paid | | Wages expense | | | | Utilities expense | | **Net income** | | | **Explanation of Diagrams/Tables:** 1. **Cash Basis Income Statement:** This section shows revenues and expenses based on cash transactions. Revenue is recorded when cash is received, and expenses are recorded when they are paid. 2. **Accrual Basis Income Statement:** This section lists revenues and expenses based on when they are earned or incurred, regardless of when cash is received or paid. Revenues from sales are recognized when the sales occur, and expenses like cost of sales, wages, and utilities are recognized when they are incurred. To accurately complete these statements, you would need to fill in the values based on the transactions described.
Transcribed Image Text:**M3-2 (Algo) Reporting Cash Basis versus Accrual Basis Income LO3-3** Skidmore Music Company had the following transactions in March: a. Sold instruments to customers for $16,300; received $10,200 in cash and the rest on account. The cost of the instruments was $7,200. b. Purchased $4,500 of new instruments inventory; paid $1,100 in cash and owed the rest on account. c. Paid $620 in wages to employees who worked during the month. d. Received $4,900 from customers as deposits on orders of new instruments to be sold to the customers in April. e. Received a $250 bill for March utilities that will be paid in April. **Complete the following statements:** The following table outlines the categorization of revenues and expenses into cash basis and accrual basis income statements: | | Cash Basis Income Statement | Accrual Basis Income Statement | |------------------------------|-----------------------------|--------------------------------| | **Revenues** | | | | Cash sales | | Sales to customers | | Customer deposits | | | | **Expenses** | | | | Inventory purchases | | Cost of sales | | Wages paid | | Wages expense | | | | Utilities expense | | **Net income** | | | **Explanation of Diagrams/Tables:** 1. **Cash Basis Income Statement:** This section shows revenues and expenses based on cash transactions. Revenue is recorded when cash is received, and expenses are recorded when they are paid. 2. **Accrual Basis Income Statement:** This section lists revenues and expenses based on when they are earned or incurred, regardless of when cash is received or paid. Revenues from sales are recognized when the sales occur, and expenses like cost of sales, wages, and utilities are recognized when they are incurred. To accurately complete these statements, you would need to fill in the values based on the transactions described.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting Equation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS