If Sweet Catering had recorded transactions using the Accrual 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.
May 1: Prepaid rent for three months, $2,100
May 5: Received and paid electricity bill, $70
May 9: Received cash for meals served to customers, $1,530
May 14: Paid cash for kitchen equipment, $3,780
May 23: Served a banquet on account, $1,780
May 31: Made the adjusting entry for rent (from May 1).
May 31: Accrued salary expense, $3,260
May 31: Recorded depreciation for May on kitchen equipment, $670
Answers
Answer:
Step-by-step explanation:
The expenses are to be taken as negative and income as positive.
May1- Rent paid for 3 months= $2100.And that of May= 2100/3=$700, which is an expense.
May 5- Paid electricity bill of $70. This is also an expense and appears in expense side of income statement.
May 9- Received cash from customers for meals served to them.This is an income and appears in the income statement as $1530.
May 14- Equipments bought for cash would appear in balance sheet and not in the income statement.
May 23- We recorded a revenue transaction here of $1780. This will appear in income statement Revenue side as $1780
May 31- Accrued salary means the salary which belongs to the month of May but still is not paid. Since we are following Accrual concept we have to record it in the expenses side of income statement as 3260$.
May 31- The depreciation on equipment purchased would appear in expense side of income statement as 670$.
Now,the sum of expenses= $700+$70+$3,260+$670 = $4700
And the sum of incomes = $1,530+$1,780= $3310
Difference= -1390.
Thus, net loss= $1390.