Sweet Catering completed the following selected transactions during May 2016 May

Question

Sweet Catering completed the following selected transactions during May 2016 May 1: Prepaid rent for three months, $2,400 May 5: Received and paid electricity bill, $200 May 9: Received cash for meals served to customers, $2,200 May 14: Paid cash for kitchen equipment, $2,230 May 23: Served a banquet on account, $2,600 May 31: Made the adjusting entry for rent (from May 1). May 31: Accrued salary expense, $2,880 May 31: Recorded depreciation for May on kitchen equipment, $500 If Sweet Catering had recorded transactions using the Cash method, how much net income (loss) would they have recorded for the month of May? If there is a loss, enter it with parentheses or a negative sign If Sweet Catering had recorded transactions using the Accrual method, how much net income (loss) would they have recorded for the month of May? If there is a loss, enter it with parentheses or a negative sign

Explanation / Answer

Calculate net income (loss) Under cash basis and accural basis :

Cash basis Accural basis May 1 -2400 May 5 -200 -200 May 9 2200 2200 May 14 -2230 May 23 2600 May 31 -800 May 31 -2880 May 31 -500 Net income -2630 420

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