Question

Skidmore Music Company had the following transactions in March:a. Sold instruments to customers for $16, 700, received $10, 700 in cash and the rest on account. The cost of the instruments was $7, 100.b. Purchased $4, 900 of new instruments inventory; paid $1, 700 in cash and owed the rest on account.c. Paid $720 in wages for the month.d. Received $3, 100 from customers as deposits on orders of new instruments to be sold to the customers in April.e. Received a $280 bill for March utilities that will be paid in April.Required:Complete the following statements:1. Cash basis Income Statement2. Accrual basis Income Statement

Answer 1

Answer:

  Skidmore Music Company

     For the month March

Cash basis Income Statement

                                       $

Sales                           13,800

Cost of Goods Sold   1,700

Gross Income             12,100

Wages Expense         (720)  

Operating Income      11,380

Accrual basis Income Statement

                                       $

Sales                           16,700

Cost of Goods Sold   4,900

Gross Income            11,800

Wages Expense         (720)

Utility Expense          (280)  

Operating Income    10,800