Question

(Entries Using Different Bases of Accounting)a. Record each of the following transactions on (1) the cash basis, (2) the modified accrual basis, and (3) the accrual basis.January 1 Billed customers $4,000 for services rendered.3 Purchased $500 of supplies on account5 Purchased a truck costing $30,000 (to be paid for on February 3).11 Collected $2000 from customers on account-15 Recorded accrued wages to date, $3,000.17 Paid for supplies.21 Paid wages.February 3 Paid for the truck5 $200 of supplies have been used.6 Depreciation on the truck for the month was $500.

Answer 1

The Cash Basis

Sr. No Account Dr. Cr.

Jan 15. Cash $ 2000

Account Receivable $ 2000

Received Cash from Customers

Jan 17. Supplies $ 500

Cash $ 500

Payment for supplies

Jan 21 Wages $3000

Cash $ 3000

Wages Paid

Feb 3 Truck $ 30,000

Cash $ 30,000

Payment of truck

Feb 6 Depreciation Expense $ 500

Truck Accumulated depreciation $ 500

Under Cash basis the asset is capitalized and depreciation is adjusted as an expense

Modified Accrual Basis Of Accounting

Sr. No Account Dr. Cr.

Jan 3 Supplies $ 500

Accounts Payable $ 500

Bought supplies on credit

Jan 5 Truck $ 30,000

Accounts Payable $ 30,000

Purchased truck on credit

Jan 11. Cash $ 2000

Service Revenue $ 2000

Received Cash from Customers

Jan 15 Wages Expense $ 3000

Wages Payable $ 3000

Jan 17. Accounts Payable (Supplies) $ 500

Cash $ 500

Payment for supplies

Jan 21 Wages Payable $3000

Cash $ 3000

Wages Paid

Feb 3 Accounts Payable(Truck) $ 30,000

Cash $ 30,000

Payment of truck

Feb 5 Supplies Expense $ 200

Supplies $ 200

$200 of the supplies have been used up

Feb 6 Truck Expense $ 500

Truck $ 500

Depreciation is not recorded it is deducted as an expense from the asset account

Accrual Basis Of Accounting

Sr. No Account Dr. Cr.

Jan 1 Account Receivable $ 4000

Services Revenue $ 4000

Billed customers for rendering services

Jan 3 Supplies $ 500

Accounts Payable $ 500

Bought supplies on credit

Jan 5 Truck $ 30,000

Accounts Payable $ 30,000

Purchased truck on credit

Jan 11. Service Revenue ( Cash ) $ 2000

Account Receivable $ 2000

Received Cash from Customers

Jan 15 Wages Expense $ 3000

Wages Payable $ 3000

Jan 17. Accounts Payable (Supplies) $ 500

Cash $ 500

Payment for supplies

Jan 21 Wages Payable $3000

Cash $ 3000

Wages Paid

Feb 3 Accounts Payable(Truck) $ 30,000

Cash $ 30,000

Payment of truck

Feb 5 Inventory $ 200

Supplies $ 200

$200 of the supplies have been used up

Feb 6 Depreciation Expense $ 500

Truck Accumulated depreciation $ 500