Question

Jenna Newbury began a music business in July 2018. Newbury prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Newbury ​Company's only activities during July through​ October: Jul 14 Bought music on account for $ 65​, with payment to the supplier due in 90 days. Aug 3 Performed a job on account for Alanna Turner for $ 55​, collectible from her in 30 days. Used up all the music purchased on July 14. Sep 16 Collected the $ 55 receivable from Turner. Oct 22 Paid the $ 65 owed to the supplier from the July 14 transaction. If Newbury Company uses the cash basis of accounting instead of the accrual​ basis, in what month will Newbury report revenue and in what month will it report​ expense?

Answer 1

Answer:

A revenue for 55 ollars with be recognize on Sep 16th

An expense of $65 will be be recognize on october 22th

Explanation:

Under cash the company will only consider the cash inflwo and disbursement as the object to recognize gain/losses.

Revenues:

55 for collected sales on September 16th

Expenses:

65 payment to suplliers October 22th