Coronado Corp. maintains its finandial records on the cash basis of accounting.
ID: 2339123 • Letter: C
Question
Coronado Corp. maintains its finandial records on the cash basis of accounting. Interested in securing a long-term loan from its regular bank, Coronado Corp. requests you as its independent CPA to convert its cash-basis income statement data to the accrual basis. You are provided with the following summarized data covering 2016, 2017, and 2018. 2016 2017 2018 Cash receipts from sales: On 2016 sales On 2017 sales On 2018 sales $268,750 $159,340 $28,810 -0- 359,890 94,820 402,820 Cash payments for expenses: On 2016 expenses 182,410 72,610 27,110 37,430146,480 53,010 48,240 b 206,570 On 2017 expenses On 2018 expenses Prepayments of 2017 expenses. Prepayments of 2018 expenses. (a) Using the data above, prepare abbreviated income statements for the years 2016 and 2017 on the cash basis (b) Using the data above, prepare abbreviated income statements for the years 2016 and 2017 on the accrual basisExplanation / Answer
Note - Purchase is on cash on delivery so not considered here
Accural Basis
e318 During the Year
Account Receivable 6677
Unearned 1271
Accrued 1327
Prepaid 1315
Cash to accural basis
Cash Receipt 142600
- Cash Expenses 55470
+Accrued Expenses 1327
+Account receivalbe 6677
+ Prepaid Expenses 1315
-Unearned Revenue 1271
excess of cash collected over cash disbursed on accural basis is 95178
PARTICULAR 2016 2017 Cash Sales 268750 519230 less Cash Expenses 219840 267330 Net Income 48910 251900 Accural Basic Sales 268750 359890 Less Expenses 182410 146480 Net Income 86340 213410