CHAPTER 47_CASH BASIS TO ACCRUAL BASIS.pdf - Chapter 47 –...

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88 Chapter 47 – Cash Basis to Accrual Basis of Accounting Multiple choice – Computational (SET A) Answers at a glance: 1. B 6. C 11. B 2. C 7. C 3. B 8. D 4. D 9. D 5. C 10. D Solutions: 1. B Solution: Receivable/ Unearned beg. - Receivable 90,000 60,000 beg. - Unearned Royalty income (squeeze) 215,000 200,000 Collection remittances end. - Unearned 40,000 85,000 end. - Receivable 2. C Solution: Receivable/Unearned beg. A/R 40,000 - beg. Unearned Service revenue (squeeze) 215,000 200,000 Collections end. Unearned 5,000 60,000 end. A/R 3. B Solution: Prepaid/Payable beg. Prepaid 55,000 80,000 beg. Payable Payments 300,000 305,000 Royalty expense (squeeze) end. Payable 75,000 45,000 end. Prepaid 4. D Solution: Accrual basis profit 95,000 (squeeze) Increase in accounts receivable (20,000) Decrease in accounts payable (15,000) Cash basis profit 60,000 (start)
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