Question

Lauhl Corporation provides janitorial services to several office buildings. During April, Lauhl engaged in the following transactions:______.
a. On April 1, Lauhl received $24,000 from Metro Corporation to provide cleaning services over the next 6 months.
b. On April 5, Lauhl purchased and received $8,500 of supplies on credit from Eagle Supply Company. During the month, Lauhl paid $5,000 to Eagle and used $1,300 of the supplies.
c. On April 20, Lauhl performed one-time cleaning services of $2,500 for Jones Company. Jones paid Lauhl the full amount on May 10.
d. On April 30, Lauhl paid employees wages of $3,400. An additional $850 was owed to employees for work performed in April.
Required:
Calculate the amount of net income that Lauhl should recognize in April under (1) cash-basis accounting and (2) accrual-basis accounting?

Answer 1

Answer:

Cash-basis accounting $15,600

Accrual-basis Accounting $7,750

Explanation:

A. Calculation to determine the amount of net income that Lauhl should recognize in April under cash-basis accounting

Cash-basis accounting

=$24,000 -$5000-$3,400

Cash-basis accounting =$15,600

Therefore the amount of net income that Lauhl should recognize in April under cash-basis accounting is $15,600

B. Calculation to determine the amount of net income that Lauhl should recognize in April under the accrual-basis Accounting

Accrual-basis Accounting=($24,000/6) -$1300 + $2500 - $3,400 - $850

Accrual-basis Accounting=$4,000-$1,300+$2,500+$3,400-$850

Accrual-basis Accounting=$7,750

Therefore the amount of net income that Lauhl should recognize in April under the accrual-basis Accounting is $7,750

Answer 2

The amount of net income that Lauhl should recognize in April under

(1) Accrual-basis accounting is $7,750

(2) Cash-basis accounting is $15,600

A. What is cash basis accounting?

Cash basis refers to a major accounting method that recognizes revenues and expenses at the time cash is received or paid out.

Calculation of cash-basis accounting

= $24,000 - $500 - $3,400

= $15,600

Hence, the amount of net income that Lauhl should recognize in April under cash-basis accounting is $15,600

B. What is accrual-basis Accounting?

Accrual accounting recognizes revenue when it's earned and expenses when they're incurred, regardless of when money actually changes hands.

Calculation of Accrual-basis accounting.

= ($24,000/6) - $1300 + $2500 - $3,400 - $850

= $4,000 - $1,300 + $2,500 + $3,400 - $850

= $7,750

Hence, the amount of net income that Lauhl should recognize in April under the accrual-basis Accounting is $7,750

Learn more about cash and accrual basis accounting here : https://brainly.com/question/14640855