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Question #1 (26 marks)
At the end of 2017, the accounting records of Besotted Company showed the following data:
| | 2017 | 2018 | 2019 |
| Service revenue: | | | |
| Cash | $70,000 | $110,000 | |
| On credit | 56,000 | 34,000 | |
| 2019 revenue collected in advance of 2019 (not Included in the $110,000) | | 10,000 | |
| Additional cash collections for: | | | |
| 2017 service revenue | 16,000 | 8,000 | |
| 2018 service revenue | | 12,000 | $4,000 |
| | | | |
| Expenses: | | | |
| Paid in cash | 44,000 | 64,000 | |
| On credit | 6,000 | 18,000 | |
| 2019 expenses paid in advance of 2019 (not Included in the $64,000) | | 10,000 | |
| Additional cash payments for: | | | |
| 2017 expenses | 4,000 | 2,000 | |
| 2018 expenses | | 8,000 | 8,000 |
| | | | |
| | | | |
Required:
Complete the following tabulation:
| | 2017 | 2018 |
| Service revenue that would be reported: | | |
| Accrual basis | $ | $ |
| Cash basis | $ | $ |
| | | |
| Expenses that would be reported: | | |
| Accrual basis | $ | $ |
| Cash basis | $ | $ |
Please show calculations here:
Answer & Explanation
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