The records of Summers Building Company reveal the following information for 2011. a. Cash receipts during 2011 (including $50,000 paid by stockholders in exchange for common stock) were $271,000. b. Cash payments during 2011 (including $7,600 of dividends paid to stockholders) were $164,850. c. Total selling price of services billed to customers during 2011 was $201,600. d. Salaries earned by employees during 2011 were $113,430. e. Cost of supplies used during 2011 in operation of the business was $47,255. Required: 1. Calculate Summers Building Company's net income for 2011 on an accrual basis. $ 2. Calculate Summers Building Company's net income for 2011 on a cash-basis. $ 3. Explain how the cash-basis of accounting allows for the manipulation of income.

The records of Summers Building Company reveal the following information for 2011. a. Cash receipts during 2011 (including $50,000 paid by stockholders in exchange for common stock) were $271,000. b. Cash payments during 2011 (including $7,600 of dividends paid to stockholders) were $164,850. c. Total selling price of services billed to customers during 2011 was $201,600. d. Salaries earned by employees during 2011 were $113,430. e. Cost of supplies used during 2011 in operation of the business was $47,255. Required: 1. Calculate Summers Building Company's net income for 2011 on an accrual basis. $ 2. Calculate Summers Building Company's net income for 2011 on a cash-basis. $ 3. Explain how the cash-basis of accounting allows for the manipulation of income.

Name: Cash-Basis and Accrual-Basis AccountingThe records of Summers Buildin
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Description: Cash-Basis and Accrual-Basis AccountingThe records of Summers Building Company reveal the following information for 2011.a. Cash receipts during 2011 (including $50,000 paid by stockholders in exchange for common stock) were $271,000.b. Cash payment

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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