Answer to Question #227582 in Accounting for NEHA NAMRITA

Question

Collected fees $10 000 in August which includes $1 500 fees earned in July. 2. Earned $2 000 fees in August to be received in September. 3. Beginning supplies on hand in was $500 and further purchase of supplies in August amounted to $1,000. All supplies were bought on credit and supplies worth $600 still remains unused at the end. 4. Paid suppliers $800 cash in August which includes $200 for supplies bought in July. 5. Paid wages amounting to $2 000 which includes $300 earned in July. Another payment of $500 earned in August will be paid in September. 6. Bought office equipment worth $2 400 and paid $1 200 cash. The remaining balance will be paid in September. Equipment is estimated to have a useful life of 2 years after which it will become obsolete. REQUIRED: (i) Prepare an income statement for the month of August using the accrual basis.(ii) Prepare an income statement for the month of August using the modified cash basis.

Answer 1

Part i

Part ii