Sweet Catering completed the following selected transactions during May 2016: Ma

Question

Sweet Catering completed the following selected transactions during May 2016: May 1: Prepaid rent for three months, $2,100 May 5: Received and paid electricity bill, $190 May 9: Received cash for meals served to customers, $2,540 May 14: Paid cash for kitchen equipment, $3,510 May 23: Served a banquet on account, $2,820 May 31: Made the adjusting entry for rent (from May 1) May 31: Accrued salary expense, $3,370 May 31: Recorded depreciation for May on kitchen equipment, $470 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

Cash method: Revenue 2540 Expenses 5800 =2100+190+3510 Net income(loss) -3260 Accrual method: Revenue 5360 =2540+2820 Expenses 4730 =190+700+3370+470 Net income(loss) 630

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