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Skidmore Music Company had the following transactions in March: Sold instruments to customers for $16,100; received $11,600...

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Accounting

Skidmore Music Company had the following transactions inMarch:

  1. Sold instruments to customers for $16,100; received $11,600 incash and the rest on account. The cost of the instruments was$8,500.

  2. Purchased $4,300 of new instruments inventory; paid $1,500 incash and owed the rest on account.

  3. Paid $700 in wages to employees who worked during the month.

  4. Received $3,200 from customers as deposits on orders of newinstruments to be sold to the customers in April.

  5. Received a $280 bill for March utilities that will be paid inApril.

Cash Basis Income StatementAccrual Basis Income Statement
RevenuesRevenues
Cash salesSales to customers
Customer deposits
ExpensesExpenses
Inventory purchasesCost of sales
Wages paidWages expense
Utilities expense
Net incomeNet income

Answer & Explanation Solved by verified expert
4.0 Ratings (571 Votes)

Cash Basis
Income Statement
Revenues:
Cash sales $       11,600
Customer deposits $         3,200 $       14,800
Expenses:
Inventory purchases $         1,500
Wages paid $             700 $         2,200
Net Income $       12,600
Accrual Basis
Income Statement
Revenues:
Sales to customers $       16,100
Expenses:
Cost of sales $         8,500
Wages paid $             700
Utilities expense $             280 $         9,480
Net Income $         6,620

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