Reference no: EM13256615

Reporting Cash Basis versus Accrual BasisIncome

Mostert Music Company had the following transactions inMarch:

a. Sold instruments to customers for $10,000; received$6,000 in cash and the rest on account. The cost of the instrumentswas $7,000.

b. Purchased $4,000 of new instruments inventory; paid$1,000 in cash and owed the rest on account.

c. Paid $600 in wages for the month.

d. Received a $200 bill for utilities that will be paidin April.

e. Received $1,000 from customers as deposits on ordersof new instruments to be sold to the customers in April. Completethe following statements:

_________________________________________________________________________________

Cash Basis Income Statement                              Accrual Basis IncomeStatement

Revenues:                                                     Revenues:

     Cash sales                        $                               Sales to customers        $

     Customer deposits

Expenses:                                                      Expenses:

    Inventory purchases                                    Cost of sales

    Wages paid                                                            Wages expense

Utilities expense

                                               _______                                                         ________

Cash income                           $______                     Net income                 $_______