Question

May 1: Prepaid rent for three months, $1,800 May 5: Received and paid electricity bill, $120 May 9: Received cash for meals served to customers, $2,890 May 14: Paid cash for kitchen equipment, $3,470 May 23: Served a banquet on account, $1,560 May 31: Made the adjusting entry for rent (from May 1). May 31: Accrued salary expense, $1,000 May 31: Recorded depreciation for May on kitchen equipment, $330 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.

Answer 1

Answer:

$1,200

Explanation:

Prepaid rent for three months = $1,800

Received and paid electricity bill = $120

Received cash for meals served to customers = $2,890

Paid cash for kitchen equipment = $3,470

Served a banquet on account = $1,560

Accrued salary expense = $1,000

Recorded depreciation for May on kitchen equipment = $330

Net income:

= Service revenue from meals + Service revenue from banquet - Electricity expenses - Depreciation on equipment - rent paid - salary expenses

= $2,890 + $1,560 - $120 -  $330 - $1,800 - $1,000

= $1,200