Question

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.

Answer 1

-$1,390

Explanation:

The computation of net income using the accrual method is shown below:-

Net income = Received cash meals to customers + Served a banquet account - Received and paid electricity bill - Accrued salary expense - Prepaid insurance expired

= $470 + $1,530 - $250 - $3,000 - $140

= -$1,390

Therefore for computing the net income using the accrual method we simply applied the above formula.