Question

Sweet Catering completed the following selected transactions during May 2016:

May 1: Prepaid rent for three months, $2,100

May 5: Received and paid electricity bill, $70

May 9: Received cash for meals served to customers, $1,530

May 14: Paid cash for kitchen equipment, $3,780

May 23: Served a banquet on account, $1,780

May 31: Made the adjusting entry for rent (from May 1).

May 31: Accrued salary expense, $3,260

May 31: Recorded depreciation for May on kitchen equipment, $670

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)rent is paid for three months ,so rent for the month=total rent paid 3=2100/3=$ 700.

2)electricity bill paid for month=$ 70

3)income for month=cash recieved for meals=$ 1530.

4)depreceation of $670 is an expense for month

5)Banquet system is an accured income for the month=$1,780

6) Accured salary expense for the month=$3,260

Total income=point 3+point 5=$1530+$1780=$3310

Total expenses=Point1+point2+point4 +point 6=$700+$70+$670+$3260=$4700

net income=total income -total expenses=$3310=$4700=   -$1390