The following information applies to the questions displayed below.] Melody\'s P

Question

The following information applies to the questions displayed below.] Melody's Plano School operations for the month of May were limited to the following transactions: Provided $900 of piano lessons to students who paid in cash. Provided $700 of piano lessons on account Collected $525 from students who took piano lessons during April. Paid April's piano rental bill of $375. Received May's piano rental bill of $425 and set it aside for payment in June. What is Melody's Net Income for May using the accrual basis of accounting?

Explanation / Answer

Under the accrual basis of accounting, revenues are reported on the income statement when they are earned. Expenses are matched with the related revenues and/or are reported when the expense occurs, not when the cash is paid.

Calculation of Net Income :-

Provided Lessons to students who paid in cash                                    $900

Add: Provided Lessons to students on account                                     $700

Less: Rental Bill For May                                                                        $425

          Net Income                                                                                  = $1175

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