Question

Fantastic Catering completed the following selected transactions during May 2016: • May 1: Prepaid rent.for three months, $2,700
• May 5: Received and paid electricity bill, $240
• May 9: Received cash for meals served to
customers, $2,700
•
May 14: Paid cash for kitchen equipment, $2,400
May 23: Served a banquet on account, $2,900
May 31: Made the adjusting entry for rent (from
May 1).
•
• May 31: Accrued salary expense, $1,800
• May 31: Recorded depreciation for May on
kitchen equipment, $730
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Answer 1

Based on the type of transaction that Fantastic Catering completed, the types of accounting basis they are in will be:

                                        Cash Basis                               Accrual Basis

May 1                                    (2,700)                                          0

May 5                                    (240)                                            (240)

May 9                                   2,700                                          2,700

May 14                                  (2,400)                                             0

May 23                                     0                                                2,900

May 31                                     0                                                 (1,800)

May 31                                     0                                                 ( 900 )

May 31                                      0                                                ( 730)

When are the cash and accrued basis used?

The cash basis is used for when cash transactions have happened. There has to be cash changing hands for this to be recorded like the prepaid rent and the payment for kitchen equipment.

The accrual basis is used for all payments and revenue including both cash transactions and those that are recorded on account such as the banquet on May 23 and accrued salaries.

Find out more on the accrual basis at brainly.com/question/25817056.

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