Requirement: Show whether each transanctinon would be handled as a revenue or an

Question

Requirement: Show whether each transanctinon would be handled as a revenue or an expense using both cash basis and accrual basis accounting systems. Sweet Catering completed the following transactions during May 2014. May 1 Prepaid rent for 3 months, $1800. May 5 received and paid electric bill $700. 9- received cash for meals served to customers $2600. 14- paid cash for kitchen equipment $1800. 23- served a banquet on account $3400. 31- made adjusting entry for rent (from May 1). 3-accrued salary expense $1700. 3-recorded depreciation for Mayor kitchen equipment $30

Explanation / Answer

Date Entry Details Amount Under Under $ Cash Basis Accrual Basis 01-May Prepaid Rent 1800 Expense $ 600 Expense $ 600 Trf to Prepaid Rent $ 1200 Trf to Prepaid Rent $ 1200 05-May Electric Bill Paid 700 Expensed fully Expensed fully 09-May Cash recd for meals 2600 Revenue Revenue 14-May Cash for Kitchen Equipment paid 1800 Capital Expense Capital Expense 23-May Banquet served on account 3400 Shown as Revenue unbilled revenue 31-May Adjusting rent entry 1200 Refer above Refer above 3 Accrued Salary Expense 1700 Shown as unpaid exp Expensed out with a corresponding effect to provisions 3- Depreciation for 30 Expensed out with a Expensed out with a kitchen equipment corresponding effect to accumulated depn corresponding effect to accumulated depn

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