Chapter 2, Problem 2.8E

Cash vs. Accrual. you are provided the following information for the Del Campo Consulting Associates.

	2019	2018
Service revenue (accrual basis)	$250,000	$185,000
Cash collected from clients	80,000	97,000
Operating expenses:
Salary expense (accrual basis)	12,000	16,500
Purchased supplies for cash	4,000	2,500
Purchased supplies on account	1,500	1,000
Depreciation expense	2,000	2,000
Rent paid in cash	7,000	3,000
Prepaid insurance	5,500	-0-

Required:

Assume that all supplies purchased were used in operations in the year of purchase Rental payments pertain to rental space used in the year of payment.

1. a. Prepare an income statement tor Del Campo tor 2019 and 2018 under both the cash and the accrual basis of accounting.
2. b. Compute operating cash flow for both years under cash and accrual bases.