Total Pool Services earned $130,000 of service revenue during 2018. Of the $130,000 earned, the business received $105,000 in cash. The remaining amount, $25,000, was still owed by customers as of December 31. In addition, Total Pool Services incurred $85,000 of expenses during the year. As of December 31, $10,000 of the expenses still needed to be paid. In addition, Total Pool Services prepaid $5,000 cash in December 2018 for expenses incurred during the next year. 1. Determine the amount of service revenue and expenses for 2018 using a cash basis accounting system. 2. Determine the amount of service revenue and expenses for 2018 using an accrual basis accounting system.

Total Pool Services earned $130,000 of service revenue during 2018. Of the $130,000 earned, the business received $105,000 in cash. The remaining amount, $25,000, was still owed by customers as of December 31. In addition, Total Pool Services incurred $85,000 of expenses during the year. As of December 31, $10,000 of the expenses still needed to be paid. In addition, Total Pool Services prepaid $5,000 cash in December 2018 for expenses incurred during the next year. 1. Determine the amount of service revenue and expenses for 2018 using a cash basis accounting system. 2. Determine the amount of service revenue and expenses for 2018 using an accrual basis accounting system.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 2EB: CPK ** Associates is a mid-size legal firm, specializing in closings and real estate law in the...

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CPK ** Associates is a mid-size legal firm, specializing in closings and real estate law in the south. In 2019, they generated $945,000 in sales revenue. Their expenses related to this year’s revenue are shown: Based on the information provided for the year, what was their net operating income?
Flip or Flop is a retail shop selling a wide variety of sandals and beach footwear. In 2019, they had gross revenue from sales totaling $93,200. Their operating expenses for this same period were $34,000. If their Cost of Goods Sold (COGS) was 21% of gross revenue, what was their net operating income for the year?
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In its first year of operations, Crane Company recognized $22,400 in service revenue, $4,800 of which was on account and still outstanding at year-end. The remaining $17,600 was received in cash from customers.The company incurred operating expenses of $12,640. Of these expenses, $9,600 were paid in cash; $3,040 was still owed on account at year-end. In addition, Crane prepaid $1,920 for insurance coverage that would not be used until the second year of operations.(a) Calculate the first year’s net earnings under the cash basis of accounting, and calculate the first year’s net earnings under the accrual basis of accounting. Cash Basis Accrual Basis Net Income $enter net income in dollars $enter net income in dollars (b) Which basis of accounting (cash or accrual) provides more useful information for decision-makers? select the basis of accounting Accrual basis Cash basis
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During the period January to December 2020 the company completed the following transactions: Kay’s Delivery Service began operations by receiving $180,000 cash and a truck valued at $250,000. The business gave Kay capital to acquire these assets. Paid $19,000 cash for supplies. Prepaid insurance, $28,000. Performed delivery services for a customer and received $5,500 cash. Completed a large delivery job, billed the customer $35,500, and received a promise to collect the $35,500 within three (3) months. Paid employees salary, $65,700. Received $15,000 cash for performing delivery services. Collected $12,000 in advance for delivery service to be performed later. Collected $35,500 cash from a customer on account. Purchased fuel for the truck, paying $29,800 with a company credit card. (Credit Accounts payable) Performed delivery services on account, $4,500. Paid office rent, $85,000 for the year. Paid $20,800 on account relating to fuel purchased. Owner withdrew cash of $15,300.…
During the period January to December 2020 the company completed the following transactions: Kay’s Delivery Service began operations by receiving $180,000 cash and a truck valued at $250,000. The business gave Kay capital to acquire these assets. Paid $19,000 cash for supplies. Prepaid insurance, $28,000. Performed delivery services for a customer and received $5,500 cash. Completed a large delivery job, billed the customer $35,500, and received a promise to collect the $35,500 within three (3) months. Paid employees salary, $65,700. Received $15,000 cash for performing delivery services. Collected $12,000 in advance for delivery service to be performed later. Collected $35,500 cash from a customer on account. Purchased fuel for the truck, paying $29,800 with a company credit card. (Credit Accounts payable) Performed delivery services on account, $4,500. Paid office rent, $85,000 for the year. Paid $20,800 on account relating to fuel purchased. Owner withdrew cash of $15,300.…
During the period January to December 2020 the company completed the following transactions: Kay’s Delivery Service began operations by receiving $180,000 cash and a truck valued at $250,000. The business gave Kay capital to acquire these assets. Paid $19,000 cash for supplies. Prepaid insurance, $28,000. Performed delivery services for a customer and received $5,500 cash. Completed a large delivery job, billed the customer $35,500, and received a promise to collect the $35,500 within three (3) months. Paid employees salary, $65,700. Received $15,000 cash for performing delivery services. Collected $12,000 in advance for delivery service to be performed later. Collected $35,500 cash from a customer on account. Purchased fuel for the truck, paying $29,800 with a company credit card. (Credit Accounts payable) Performed delivery services on account, $4,500. Paid office rent, $85,000 for the year. Paid $20,800 on account relating to fuel purchased. Owner withdrew cash of $15,300.…
During the period January to December 2020 the company completed the following transactions: Kay’s Delivery Service began operations by receiving $180,000 cash and a truck valued at $250,000. The business gave Kay capital to acquire these assets. Paid $19,000 cash for supplies. Prepaid insurance, $28,000. Performed delivery services for a customer and received $5,500 cash. Completed a large delivery job, billed the customer $35,500, and received a promise to collect the $35,500 within three (3) months. Paid employees salary, $65,700. Received $15,000 cash for performing delivery services. Collected $12,000 in advance for delivery service to be performed later. Collected $35,500 cash from a customer on account. Purchased fuel for the truck, paying $29,800 with a company credit card. (Credit Accounts payable) Performed delivery services on account, $4,500. Paid office rent, $85,000 for the year. Paid $20,800 on account relating to fuel purchased. Owner withdrew cash of $15,300.…
LaBouche Company had cash receipts from customers in 2017 of $142,000. Cash payments for operating expenses were $97,000. Kelly has determined that at January 1, unearned service revenues was $13,000, and prepaid expenses were $17,500. At December 31, unearned service revenues was $18,600, and prepaid expenses were $23,100. The service revenues on cash basis is:
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