Consider the following set of transactions occurring during the month of May for Bison Consulting Company. For each transaction, indicate the impact on (1) the balance of cash, (2) cash-basis net income, and (3) accrual-basis net income for May. The first answer is provided as an example. CashCash-Basis Accrual-BasisImpact on:BalanceNet IncomeNet Income+$1,500+$1,500$0(a) Receive $1,500 from customers whowere billed for services in April.(b) Provide $3,200 of consulting servicesto a local business. Payment is notexpected until June.(c) Purchase office supplies for $400 onaccount. All supplies are used by theend of May.(d) Pay $600 to workers. $400 is for work inMay and $200 is for work in April.(e) Pay $200 to advertise in a localnewspaper in May.Totals

Business transactions can be defined events which are dealt for the business purpose that is to earn…

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Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter3: Processing Accounting Information

Section: Chapter Questions

Problem 3.12MCE: Determining an Ending Account Balance Jessies Accounting Services was organized on June 1. The...

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Consider the following set of transactions occurring during the month of May for Bison Consulting Company. For each transaction, indicate the impact on (1) the balance of cash, (2) cash-basis net income, and (3) accrual-basis net income for May. The first answer is provided as an example.

Cash
Cash-Basis Accrual-Basis
Impact on:
Balance
Net Income
Net Income
+$1,500
+$1,500
$0
(a) Receive $1,500 from customers who
were billed for services in April.
(b) Provide $3,200 of consulting services
to a local business. Payment is not
expected until June.
(c) Purchase office supplies for $400 on
account. All supplies are used by the
end of May.
(d) Pay $600 to workers. $400 is for work in
May and $200 is for work in April.
(e) Pay $200 to advertise in a local
newspaper in May.
Totals

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