May 1: Prepaid rent for three months, $1,800 May 5: Received and paid electricit
ID: 2561559 • Letter: M
Question
May 1: Prepaid rent for three months, $1,800 May 5: Received and paid electricity bill, $230 May 9: Received cash for meals served to customers, $2,300 May 14: Paid cash for kitchen equipment, $3,030 May 23: Served a banquet on account, $2,860 May 31: Made the adjusting entry for rent (from May 1) May 31: Accrued salary expense, $1,800 May 31: Recorded depreciation for May on kitchen equipment, $600 If Sweet Catering had recorded transactions using the Cash method, how much net income (loss) would they have recorded for the month of May? If there is a loss, enter it with parentheses or a negative sign (2,700) If Sweet Catering had recorded transactions using the Accrual method, how much net income (loss) would they have recorded for the month of May? If there is a loss, enter it with parentheses or a negative sign.Explanation / Answer
CALCULATE NET INCOME UNDER CASH AND ACCURAL METHOD :
Net income under cash method = 270
Net income under accural method = 1930
CASH ACCURAL Rent (1800) (600) Electricity bill (230) (230) Service revenue (cash) 2300 2300 Service revenue (credit) 2860 Salary expenses (1800) Depreciation (600) NET INCOME 270 1930