Zuhoor Muscat Company reported the following transactions during the year 2020: collected RO 85,000 cash from customers for services provided during 2020 and Received RO 65,000 from customers for services provided during 2019. Additionally, Zuhoor Muscat Company provided services to customers during 2020 for a total of RO 120,000 and accepted RO 35,000 cash for services to be performed in 2021. If Zuhoor Muscat Company is applying cash basis accounting, then the effect of the above transactions on its net income at year-end 2020 will be: O a Increase by RO 205,000. Ob Increase by RO 185,000. Oc Increase by RO 240,000. Od. None of the options are correct. Oe Increase by RO 270,000.

Zuhoor Muscat Company reported the following transactions during the year 2020: collected RO 85,000 cash from customers for services provided during 2020 and Received RO 65,000 from customers for services provided during 2019. Additionally, Zuhoor Muscat Company provided services to customers during 2020 for a total of RO 120,000 and accepted RO 35,000 cash for services to be performed in 2021. If Zuhoor Muscat Company is applying cash basis accounting, then the effect of the above transactions on its net income at year-end 2020 will be: O a Increase by RO 205,000. Ob Increase by RO 185,000. Oc Increase by RO 240,000. Od. None of the options are correct. Oe Increase by RO 270,000.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter3: Accrual Accounting

Section: Chapter Questions

Problem 2MCQ: In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in...

See similar textbooks

Similar questions

Blue Company, an architectural firm, has a bookkeeper who maintains a cash receipts and disbursements journal. At the end of the year (2019), the company hires you to convert the cash receipts and disbursements into accrual basis revenues and expenses. The total cash receipts are summarized as follows. The accounts receivable from customers at the end of the year are 120,000. You note that the accounts receivable at the beginning of the year were 190,000. The cash sales included 30,000 of prepayments for services to be provided over the period January 1, 2019, through December 31, 2021. a. Compute the companys accrual basis gross income for 2019. b. Would you recommend that Blue use the cash method or the accrual method? Why? c. The company does not maintain an allowance for uncollectible accounts. Would you recommend that such an allowance be established for tax purposes? Explain.
In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in December 2019 and a cash payment of S4,500 for services to be performed in January 2020. Swanstrom also receives the December utility bill for S600 but does not pay this bill until 2020. For 2019, under the accrual basis of accounting, Swanstrom would recognize: a. $8,000 of revenue and $600 of expense. b. $8,000 of revenue and $0 of expense. c. $3,500 of revenue and $600 of expense. d. $3,500 Of revenue and $0 of expense.
Selected information from Brook Corporations accounting records and financial statements for 2019 follows: On the statement of cash flows for the year ended December 31, 2019, Brook should disclose a net increase in cash in the amount of: a. 1,700,000 b. 2,400,000 c. 3,700,000 d. 4,200,000
West End Inc., an auto mechanic shop, has the following account balances, given in no certain order, for the quarter ended March 31, 2019. Based on the information provided, prepare West Ends annual financial statements (omit the Statement of Cash Flows). Prepare West Ends annual financial statements. (Omit the Statement of Cash Flows.)
Cash Receipts from Customers Singleton Inc. had accounts receivable of $22,150 at January 1, 2019, and $26,850 at December 31, 2019. Net income for 2019 was $125,300 and sales revenue was $1,240,000. Required: Compute the amount of cash collected from customers using the direct method.
Using a Spreadsheet to Prepare a Statement of Cash Flows Fleet Limousine Service Inc. began operations in late March 2019. At the end of 2019, the following balance sheet was prepared for Fleet. Required: 1. Using a spreadsheet, prepare a statement of cash flows for 2019. Assume Fleet Limousine uses the indirect method. 2. CONCEPTUAL CONNECTION Discuss whether Fleet Limousine appeals to have matched the timing of inflows and outflows of cash.
Use the following excerpts from Algona Companys financial statements to determine cash received from customers in 2018.