Total Pool Services earned $130,000 of service revenue during 2018. Of the $130,000 earned, the business received $105,000 in cash. The remaining amount, $25,000, was still owed by customers as of December 31. In addition, Total Pool Services incurred $85,000 of expenses during the year. As of December 31, $10,000 of the expenses still needed to be paid. In addition, Total Pool Services prepaid $5,000 cash in December 2018 for expenses incurred during the next year. 1. Determine the amount of service revenue and expenses for 2018 using a cash basis accounting system. 2. Determine the amount of service revenue and expenses for 2018 using an accrual basis accounting system.
Total Pool Services earned $130,000 of service revenue during 2018. Of the $130,000 earned, the business received $105,000 in cash. The remaining amount, $25,000, was still owed by customers as of December 31. In addition, Total Pool Services incurred $85,000 of expenses during the year. As of December 31, $10,000 of the expenses still needed to be paid. In addition, Total Pool Services prepaid $5,000 cash in December 2018 for expenses incurred during the next year. 1. Determine the amount of service revenue and expenses for 2018 using a cash basis accounting system. 2. Determine the amount of service revenue and expenses for 2018 using an accrual basis accounting system.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Total Pool Services earned $130,000 of service revenue during 2018. Of the $130,000 earned, the business received $105,000 in
cash. The remaining amount, $25,000, was still owed by customers as of December 31. In addition, Total Pool Services incurred
$85,000 of expenses during the year. As of December 31, $10,000 of the expenses still needed to be paid. In addition, Total Pool
Services prepaid $5,000 cash in December 2018 for expenses incurred during the next year.
1. Determine the amount of service revenue and expenses for 2018 using a cash basis accounting system.
2. Determine the amount of service revenue and expenses for 2018 using an accrual basis accounting system.
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