The following information describes transactions for Morgenstern Advertising Com
ID: 2419254 • Letter: T
Question
The following information describes transactions for Morgenstern Advertising Company during July:
On July 5, Morgenstern purchased and received $24,300 of supplies on credit from Drexel Supply Inc. During July, Morgenstern paid $20,500 cash to Drexel and used $18,450 of the supplies.
Morgenstern paid $9,600 to salespeople for salaries earned during July. An additional $1,610 was owed to salespeople at July 31 for salaries earned during the month.
Paid $2,950 to the local utility company for electric service. Electric service in July was $2,300 of the $2,950 total bill.
Required:
1. Calculate the amount of expense recognized in July under cash-basis accounting:
I can figure out the accural-basis accounting but I don't get the cash-basis...please help.
Explanation / Answer
The Amount of Expense recognised in july is the actual amount paid in the month of july .
Amount of expense = 20500+9600+2950 = $33050
Cash basis records the income and expenses in the month they are received or paid no matter when the actual sales occured.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.