Question

Question 1

The following transactions for Carleton Company occurred during January 2016:

Jan.	1	Purchased a two-year insurance policy for cash, $8,400
	4	Paid utilities bill received December 2015, $450
	9	Performed a service on account, $1,200
	16	Paid bimonthly salary to employees, $2,700
	21	Received $800 from a customer on account
	25	Received $600 from January 9 transaction
	30	Prepared the adjusting entry for insurance from January 1 transaction
	30	Accrued wages of $2,750

Show the total amount of revenue and expense recognized under both the accrual basis and cash basis of accounting.

Accrual Basis
Revenue Total
Expense Total

Cash Basis
Revenue Total
Expense Total

Answer 1

Accrual Basis
Revenue Total	1200
Expense Total	8950

Cash Basis
Revenue Total	1400
Expense Total	11550

Working notes for the above answer is as under

1

calculation of the Accrual Basis

Revenue - Accrual Basis
Service	1200
Total	1200
Expanses- Accrual Basis
Insurance	3500
Salary	2700
Accrual Wages	2750
Total	8950

2

calculation of the Cash Basis

Revenue - Cash Basis
Service	800
Service	600
Total	1400
Expanses- Accrual Basis
Insurance	8400
Salary	450
Accrual Wages	2700
Total	11550