Chapter 3 Exercises – Cash Versus Accrual Accounting
Zookie’s Shop, a proprietorship business, conducted the following transactions during the first week in March.
Purchased supplies for $1,800. Paid 20% down, remaining 80% to be paid in 10 days.
Paid $30 for newspaper advertising to appear this week.
Collected $1,400 from customers on account.
4. Performed services sat a $1,620 charge to customers; however, cash payment is not due until next
Paid $600 rent for the month of March.
Performed services for $280 cash.
Paid part-time sales clerk $40 wages for the week.
Wrote a check for $100 to the owner for her personal use.
Consumed supplies of $1,400.
Compute the net income for the week, using the cash method of accounting.
Compute the net income for the week, using the accrual method of accounting.
Dr. Bob Zimmerman, M.D. maintains the accounting records of the Wellness Center on a cash basis. During
2007, Dr. Zimmerman collected $305,400 from his patients and paid $91,200 in expenses. Information
regarding the amount of receivables (accrued revenues), unearned revenues, payables for accrued expenses,
and prepaid expenses is as follows:
Balance at 12.31.2007
Balance at 12.31.2008