Jenna Newbury began a music business in July 2018. Newbury prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Newbury Company's only activities during July through October: Jul 14 Bought music on account for $ 65 , with payment to the supplier due in 90 days. Aug 3 Performed a job on account for Alanna Turner for $ 55 , collectible from her in 30 days. Used up all the music purchased on July 14. Sep 16 Collected the $ 55 receivable from Turner. Oct 22 Paid the $ 65 owed to the supplier from the July 14 transaction. If Newbury Company uses the cash basis of accounting instead of the accrual basis, in what month will Newbury report revenue and in what month will it report expense?

Question

Isabelle

Business

1 November, 10:11

Jenna Newbury began a music business in July 2018. Newbury prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Newbury Company's only activities during July through October: Jul 14 Bought music on account for $ 65 , with payment to the supplier due in 90 days. Aug 3 Performed a job on account for Alanna Turner for $ 55 , collectible from her in 30 days. Used up all the music purchased on July 14. Sep 16 Collected the $ 55 receivable from Turner. Oct 22 Paid the $ 65 owed to the supplier from the July 14 transaction. If Newbury Company uses the cash basis of accounting instead of the accrual basis, in what month will Newbury report revenue and in what month will it report expense?

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Answers (1)

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Jessie Stokes · Answer 1

A revenue for 55 ollars with be recognize on Sep 16th

An expense of $65 will be be recognize on october 22th

Explanation:

Under cash the company will only consider the cash inflwo and disbursement as the object to recognize gain/losses.

Revenues:

55 for collected sales on September 16th

Expenses:

65 payment to suplliers October 22th