1. (2pts) Revenue recognition accrual basis vs. cash basis: Ring The Bells, Inc.
ID: 2341496 • Letter: 1
Question
1. (2pts) Revenue recognition accrual basis vs. cash basis: Ring The Bells, Inc. provides doorbell repair services to customers and began operations in February 2018. On March 4th, 2018, Ring The Bells, Inc. collected $2,400 in cash from customers for services performed in February 2018. On March 11th, Ring The Bells, Inc. provided $690 worth of services to customers, all of whom paid in cash. On March 25th, 2018 Ring the Bells provided additional services worth $3,470 on account to customers, which will not be collected until April. (1pt) Using accrual-basis accounting, how much revenue would Ring the Bells record for March 2018? Briefly explain or show how you got your answer. (1pt) Using cash-basis accounting, how much revenue would Ring the Bells record for March 2018? Briefly explain or show how you got your answer. a. b. 2. (2pts) Expense recognition accrual basis vs. cash basis: Ring The Bells, Inc. provides doorbell repair services to customers and began operations in February 2018. On March 2o, 2018, Ring The Bells, Inc. paid $800 in cash to creditors for supplies purchased on account on February 1st and used in February 2018. On March 15thRing The Bells, Inc. paid $1,850 in cash to employees for work done March 1t-15th. On March 29th, 2018 Ring the Bells received a bill of $720 from the utility company for March utilities used which will not be paid until April. (1pt) Using accrual-basis accounting, how much in expenses would Ring the Bells record for March 2018? Briefly explain or show how you got your answer. (1pt) Using cash-basis accounting, how much in expenses would Ring the Bells record for March 2018? Briefly explain or show how you got your answer. a. b.Explanation / Answer
1-
Date
Amount
4-Mar
2400
collected for Feb sales
11-Mar
690
Cash sales
25-Mar
3470
credit sales
Under accrual basis of accounting revenue for March = 690+3470
4160
Under accrual system of accounting cash as well as credit both types of services would be considered
4-Mar
2400
collected for Feb sales
11-Mar
690
Cash sales
25-Mar
3470
credit sales
Under cash basis of accounting revenue for March = 690
690
Under cash system of accounting only service provided and paid with cash would be considered and service with credit basis would not be considered
2-
Date
Amount
4-Mar
800
paid to creditors for Feb purchase
15-Mar
1850
paid to employees
29-Mar
720
Utilities expense payable
Under accrual basis of accounting expense for March = 1850+720
2570
Under accrual system of accounting cash as well as credit both types of expenses would be considered
4-Mar
800
collected for Feb sales
11-Mar
1850
Cash sales
25-Mar
720
credit sales
Under cash basis of accounting expense for March =
1850
Under cash system of accounting only expenses provided and paid with cash would be considered and expense with credit basis would not be considered
1-
Date
Amount
4-Mar
2400
collected for Feb sales
11-Mar
690
Cash sales
25-Mar
3470
credit sales
Under accrual basis of accounting revenue for March = 690+3470
4160
Under accrual system of accounting cash as well as credit both types of services would be considered
4-Mar
2400
collected for Feb sales
11-Mar
690
Cash sales
25-Mar
3470
credit sales
Under cash basis of accounting revenue for March = 690
690
Under cash system of accounting only service provided and paid with cash would be considered and service with credit basis would not be considered
2-
Date
Amount
4-Mar
800
paid to creditors for Feb purchase
15-Mar
1850
paid to employees
29-Mar
720
Utilities expense payable
Under accrual basis of accounting expense for March = 1850+720
2570
Under accrual system of accounting cash as well as credit both types of expenses would be considered
4-Mar
800
collected for Feb sales
11-Mar
1850
Cash sales
25-Mar
720
credit sales
Under cash basis of accounting expense for March =
1850
Under cash system of accounting only expenses provided and paid with cash would be considered and expense with credit basis would not be considered
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