The following information describes transactions for Morgenstern Advertising Company during July:a. On July 5, Morgenstern purchased and received $24,300 of supplies on credit from Drexel SupplyInc. During July, Morgenstern paid $20,500 cash to Drexel and used $18,450 of the supplies.b. Morgenstern paid $9,600 to salespeople for salaries earned during July. An additional$1,610 was owed to salespeople at July 31 for salaries earned during the month.c. Paid $2,950 to the local utility company for electric service. Electric service in July was$2,300 of the $2,950 total bill.Required:Calculate the amount of expense recognized in July under (1) cash-basis accounting and(2) accrual-basis accounting.
The following information describes transactions for Morgenstern Advertising Company during July:a. On July 5, Morgenstern purchased and received $24,300 of supplies on credit from Drexel SupplyInc. During July, Morgenstern paid $20,500 cash to Drexel and used $18,450 of the supplies.b. Morgenstern paid $9,600 to salespeople for salaries earned during July. An additional$1,610 was owed to salespeople at July 31 for salaries earned during the month.c. Paid $2,950 to the local utility company for electric service. Electric service in July was$2,300 of the $2,950 total bill.Required:Calculate the amount of expense recognized in July under (1) cash-basis accounting and(2) accrual-basis accounting.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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| The following information describes transactions for Morgenstern Advertising Company during July: a. On July 5, Morgenstern purchased and received $24,300 of supplies on credit from Drexel Supply Inc. During July, Morgenstern paid $20,500 cash to Drexel and used $18,450 of the supplies. b. Morgenstern paid $9,600 to salespeople for salaries earned during July. An additional $1,610 was owed to salespeople at July 31 for salaries earned during the month. c. Paid $2,950 to the local utility company for electric service. Electric service in July was $2,300 of the $2,950 total bill. Required: Calculate the amount of expense recognized in July under (1) cash-basis accounting and (2) accrual-basis accounting. |
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