Give true answer Total Spa Services earned $150,000 of service revenue during 2021. Of the$150,000 earned, the business received $135,000 in cash. The remainingamount, $15,000, was still owed by customers as of December 31. In addition,Total Spa Services incurred $78,000 of expenses during the year. As ofDecember 31, $6,000 of the expenses still needed to be paid. In addition, TotalSpa Services prepaid $9,000 cash in December 2021 for expenses incurredduring the next year.A) Determine the amount of service revenue and expenses for 2021 usinga cash-basis accounting system.B) Determine the amount of service revenue and expenses for 2021 usingan accrual-basis accounting system.

Let me give the details carefully to ensure accuracy for both the cash-basis and accrual-basis…

Answered: Total Spa Services earned $150,000 of…

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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In its first year of operations, the Company made $22960 in service revenue, $4920 of which was on account and still outstanding at year-end. The remaining $18040 was received in cash from customers. The company incurred operating expenses of $12956. Of these expenses, $9840 was paid in cash, and $3116 was still owed on account at year-end. CEO prepaid $1968 for insurance that would not be used until the second year of operations. calculate first years net earnings under cash basis accounting, and calculate first years net earnings under the accrual basis of accounting.
Brady Corporation is preparing an income statement for year ended 12/31/20. During the final week of 2020, Brady earned revenues of $6,000 on account. It expects to collect the $6,000 on 1/10/21. Brady also incurred $1,500 of payroll costs which will be paid to employees on 1/15/21. Brady also paid cash of $500 for office cleaning services. No other transactions occurred in 2020. What is the net income of Brady Corporation if it uses cash basis accounting?
In its first year of operations, Ivanhoe Company recognized $28,560 in service revenue, $6,120 of which was on account and still outstanding at year-end. The remaining $22,440 was received in cash from customers. The company incurred operating expenses of $16,116. Of these expenses, $12,240 were paid in cash; $3,876 was still owed on account at year-end. In addition, Ivanhoe prepaid $2,448 for insurance coverage that would not be used until the second year of operations. (a) Calculate the first year's net earnings under the cash basis of accounting, and calculate the first year's net earnings under the accrual basis of accounting. Cash Basis Net Income $ Accrual Basis $ (b) Which basis of accounting (cash or accrual) provides more useful information for decision-makers?
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Lynford Company sold 10,500 dishwashers for $1,100 each during 2021. The dishwashers are under warranty for one year following the sale. Maintenance on the dishwashers during the warranty period averages $90 each. Actual warranty costs incurred during 2021 for units sold that year were $296,000. The statement of financial position at year end will report a related liability of: Select one: a. $296,000. O b. $649,000. O c. $1,030,900. O d. $945,000.
FDN Company earns revenue from rendering advertising services to various clients. FN Company received P28,000 for advertising services to be provided to clients and this was credited to a liability account. At year end, 20% of advertising services has been provided. How much is the advertising revenue for the year ended December 31, 2021?
Thomas Company had the following information related to September 2020: 1) Depreciation on the store equipment was $60,000 for the month. 2) Sales of merchandise inventory for the month of September were $1,800,000, of which $1,200,000 was paid in cash and the remaining amount sold on credit. The cost of the merchandise sold was $1,080,000. 3) The next payroll will be $144,000 and will be paid on October 12. This payroll will cover wages earned during the last week of September and the first week of October. 4) The utility bill of $72,000 for the month of September was both received and paid in early October. 5) Thomas sold a company car for a gain of $12,000 on September 22. 6) On September 3, Thomas paid $6,000 for August’s telephone bill. 7) On October 1, Thomas received the September telephone bill, which totaled $12,000. The bill will be paid in mid-October. 8) Wages paid in cash to employees during the month totaled $288,000. This amount included $60,000 paid for work done in…
Thomas Company had the following information related to September 2020: 1) Depreciation on the store equipment was $60,000 for the month. 2) Sales of merchandise inventory for the month of September were $1,800,000, of which $1,200,000 was paid in cash and the remaining amount sold on credit. The cost of the merchandise sold was $1,080,000. 3) The next payroll will be $144,000 and will be paid on October 12. This payroll will cover wages earned during the last week of September and the first week of October. 4) The utility bill of $72,000 for the month of September was both received and paid in early October. 5) Thomas sold a company car for a gain of $12,000 on September 22. 6) On September 3, Thomas paid $6,000 for August’s telephone bill. 7) On October 1, Thomas received the September telephone bill, which totaled $12,000. The bill will be paid in mid-October. 8) Wages paid in cash to employees during the month totaled $288,000. This amount included $60,000 paid for work done in…
Thomas Company had the following information related to September 2020: 1) Depreciation on the store equipment was $60,000 for the month. 2) Sales of merchandise inventory for the month of September were $1,800,000, of which $1,200,000 was paid in cash and the remaining amount sold on credit. The cost of the merchandise sold was $1,080,000. 3) The next payroll will be $144,000 and will be paid on October 12. This payroll will cover wages earned during the last week of September and the first week of October. 4) The utility bill of $72,000 for the month of September was both received and paid in early October. 5) Thomas sold a company car for a gain of $12,000 on September 22. 6) On September 3, Thomas paid $6,000 for August’s telephone bill. 7) On October 1, Thomas received the September telephone bill, which totaled $12,000. The bill will be paid in mid-October. 8) Wages paid in cash to employees during the month totaled $288,000. This amount included $60,000 paid for work done in…
Thomas Company had the following information related to September 2020: 1) Depreciation on the store equipment was $60,000 for the month. 2) Sales of merchandise inventory for the month of September were $1,800,000, of which $1,200,000 was paid in cash and the remaining amount sold on credit. The cost of the merchandise sold was $1,080,000. 3) The next payroll will be $144,000 and will be paid on October 12. This payroll will cover wages earned during the last week of September and the first week of October. 4) The utility bill of $72,000 for the month of September was both received and paid in early October. 5) Thomas sold a company car for a gain of $12,000 on September 22. 6) On September 3, Thomas paid $6,000 for August’s telephone bill. 7) On October 1, Thomas received the September telephone bill, which totaled $12,000. The bill will be paid in mid-October. 8) Wages paid in cash to employees during the month totaled $288,000. This amount included $60,000 paid for work done in…
In its first year of operations, Cullumber Company recognized $23,520 in service revenue, $5,040 of which was on account and still outstanding at year-end. The remaining $18,480 was received in cash from customers. The company incurred operating expenses of $13,272. Of these expenses, $10,080 were paid in cash; $3,192 was still owed on account at year-end. In addition, Cullumber prepaid $2,016 for insurance coverage that would not be used until the second year of operations. (a) Calculate the first year's net earnings under the cash basis of accounting, and calculate the first year's net earnings under the accrual basis of accounting. Cash Basis Net earnings $ +A Accrual Basis (b) Which basis of accounting (cash or accrual) provides more useful information for decision-makers? eTextbook and Media
In its first year of operations, Wildhorse Co. recognized $30,800 in service revenue, $6,600 of which was on account and still outstanding at year-end. The remaining $24,200 was received in cash from customers. The company incurred operating expenses of $17,380. Of these expenses, $13,200 were paid in cash; $4,180 was still owed on account at year-end. In addition, Wildhorse prepaid $2,640 for insurance coverage that would not be used until the second year of operations. (a) Calculate the first year's net earnings under the cash basis of accounting, and calculate the first year's net earnings under the accrual basis of accounting. Net Income Cash Basis Accrual Basis (b) Which basis of accounting (cash or accrual) provides more useful information for decision-makers?

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