Aunt Athena’s Catering Service provides catering service for special occasions. During 2019, Aunt Athena performed $140,500 of catering services and collected $110,300 of cash from customers. Salaries earned by Aunt Athena’s employees during 2019 were $40,000. Aunt Athena paid employees $36,500 during 2019. Aunt Athena had $1,300 of supplies on hand at the beginning of the year and purchased and paid for an additional $7,000 of supplies during the year. Supplies on hand at the end of 2019 were $1,700. Other selling and administrative expenses incurred and paid for during 2019 were $5,500. Required: Calculate Aunt Athena’s amount of accrual and cash-basis income for 2019 by completing the table below . ACCRUAL BASIS CASH BASIS Revenues: Catering services Less Expenses: Salaries Supplies Other administrative and selling Net Income Which basis (cash or accrual) reflects more accurately the performance of Aunt Athena’s business? Briefly explain why.
Aunt Athena’s Catering Service provides catering service for special occasions. During 2019, Aunt Athena performed $140,500 of catering services and collected $110,300 of cash from customers. Salaries earned by Aunt Athena’s employees during 2019 were $40,000. Aunt Athena paid employees $36,500 during 2019. Aunt Athena had $1,300 of supplies on hand at the beginning of the year and purchased and paid for an additional $7,000 of supplies during the year. Supplies on hand at the end of 2019 were $1,700. Other selling and administrative expenses incurred and paid for during 2019 were $5,500.
Required:
- Calculate Aunt Athena’s amount of accrual and cash-basis income for 2019 by completing the table below .
|
|
ACCRUAL BASIS
|
CASH BASIS |
|
Revenues:
|
|
|
|
Catering services
|
|
|
|
Less Expenses:
|
|
|
|
Salaries
|
|
|
|
Supplies
|
|
|
|
Other administrative and selling
|
|
|
|
|
|
|
|
Net Income
|
|
|
- Which basis (cash or accrual) reflects more accurately the performance of Aunt Athena’s business? Briefly explain why.
__________________________________________________________________________
___________________________________________________________________________
Step by step
Solved in 2 steps
