earned $ 155,000 of service revenue during 2018. Of the $ 155,000 earned, the business received $ 135.000 in cash. The remaining amount, $ 20,000 , was still owed by customers as of December 31. In addition, Total Spa Services incurred $ 82,000 of expenses during the year. As of December 31 , $ 8,000 of the expenses still needed to be paid. In addition, Total Spa Services prepaid $ 7,000 cash in December 2018 for expenses incurred during the next year. 1. Determine the amount of service revenue and expenses for 2018 using a cash basis accounting system 2. Determine the amount of service revenue and expenses for 2018 using an accrual basis accounting system.

Question

Miles

Business

26 June, 18:48

earned $ 155,000 of service revenue during 2018. Of the $ 155,000 earned, the business received $ 135.000 in cash. The remaining amount, $ 20,000 , was still owed by customers as of December 31. In addition, Total Spa Services incurred $ 82,000 of expenses during the year. As of December 31 , $ 8,000 of the expenses still needed to be paid. In addition, Total Spa Services prepaid $ 7,000 cash in December 2018 for expenses incurred during the next year. 1. Determine the amount of service revenue and expenses for 2018 using a cash basis accounting system 2. Determine the amount of service revenue and expenses for 2018 using an accrual basis accounting system.

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Answers (1)

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Cailyn · Answer 1

1. - revenue 142,000

expenses 81,000

2. - revenue 155,000

expenses 82,000

Explanation:

1) 135,000 cash proceed from services + 7000 prepaid services = revenue under cash basis accounting 142,000

beginning payable + incurred - ending = paid

7,000 + 82,000 - 8,000 = 81,000

2) under accrual basis accounting it will count the earned services only,

and the incurred expenses for the period.