M3-2 Reporting Cash Basis versus Accrual Basis IncomeSkidmore Music Company had the following transactions in March: a. Sold instruments to customers for $18,000; received $8,000 in cash and the rest on account. The cost of the instrume b. Purchased $4,000 of new instruments inventory; paid $1,000 in cash and owed the rest on account. c. Paid $900 in wages for the month. d. Received $5,000 from customers as deposits on orders of new instruments to be sold to the customers in April. e. Received a $300 bill for March utilities that will be paid in April. (REQUIRED) Complete the following statements: Cash Basis Income Statement Accrual Basis Income Statement Revenues Cash Sales Customer deposits Revenues Sales to customers Expenses Inventory purchases Wages paid Expenses Cost of sales Wages expense Utilities expense Net Income Net Income est on account. d the rest on account. The cost of the instruments was $9. Accrual Basis come Statement .000. be sold to the customers in April. paid cash.000 of equipment (refrigerated display cases. and chairs) and renovated and decorated the new store for $20.830 in March. Inc. Paid a $300 dividend from the corporation to each owner. Gave the two owners each 500 shares of common stock with a par value of $1 per share.000 in accounts receivable. i.000 cash down payment and signing a 10-year mortgage from a local bank for the rest. in March. Retained Earnings. Building. Accounts Payable.200. Received a $420 telephone bill for March to be paid in April. Set up appropriate T-accounts for Cash. . and $1. Required: 1. tables. Additional Paid-in Capital. in addition to $2. The following transactions occurred in March 2014: a. Equipment.E3-13 Lisa Frees and Amelia Ellinger had been operating a catering business for several years. h. the partners were planning to expand by opening a retail sales shop and decided to form the business as a corporation called Traveling Gourmet. j.000. one-year note.300 in equipment. and the rest was received in cash. Mortgage Payable.600 was billed. Identify the amounts with the letters starting with (a). and Fuel Expense. Supplies Expense. f. Made and sold food at the retail store for $11.. Note Payable. b.200 in supplies.000 cash from each of the two shareholders to form the corporation. In March 2014. Catered four parties in March for $4. k. Purchased and used food and paper supplies costing $10.000 (added to the cost of the building).000 from the local bank on a 10 percent. c. Accounts Receivable. Utilities Expense.000. Common Stock. Borrowed $50. d. making a $72. Catering Sales Revenue. Purchased a vacant store for sale in a good location for $360.900 cash. Purchased $50. Wages Expense.280 in wages to employees who worked in March. Inc. Compute ending balances. Received $80. Paid $363 in gas for the van in March. $5. a van (equipment) appraised at a fair value of $13. Paid $6. $1. g. e. paid cash. 2. Supplies. Food Sales Revenue. Record in the T-accounts the effects of each transaction for Traveling Gourmet. cabinets. Not required. but recommended: Reference a a a a a a b b b c c d d e e e f f g g h h i i j j k k k Example: Account Debit Credit . Reference Account a Cash Equipment Debit $ Credit 100 $ 100 . Ref. Ref. - $ Beg. Beg. - SUPPLIES - ACCOUNTS PAYABLE $ NOTES PAYABLE $ $ Ref. MORTGAGE PAYABLE $ $ $ Beg. Ref. $ $ EQUIPMENT - BUILDING - - Ref. $ $ ACCOUNTS RECEIVABLE - Ref. Beg. - - Ref. Beg. Beg. .Requirement 1 & 2: Ref. $ Ref. Beg. $ CASH - $ - $ $ Beg. Ref. - - - Ref. $ . $ . - CATERING SALES REVENUE Ref.COMMON STOCK $ $ - Ref. Beg.Beg. Ref. - Ref. $ Ref. Beg. $ $ Ref. Beg. $ Ref. $ $ FUEL EXPENSE - - . - RETAINED EARNINGS $ $ - - FOOD SALES REVENUE $ - $ ADDITIONAL PAID-IN CAPITAL Ref. $ $ Ref. Beg.Beg. Beg. Beg. Ref. $ SUPPLIES EXPENSE - - UTILITIES EXPENSE - - WAGES EXPENSE - $ Ref. Beg. UTILITIES EXPENSE Ref. .SUPPLIES EXPENSE Ref. FUEL EXPENSE Ref. WAGES EXPENSE Ref.