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

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