Question

Total Pool Services earned $130,000 of service revenue during 2018. Of the $130,000 earned, the business received $105,000 in cash. The remaining amount, $25,000, was still owed by customers as of December 31. In addition, Total Pool Services incurred $85,000 of expenses during the year. As of December 31, $10,000 of the expenses still needed to be paid. In addition, Total Pool Services prepaid $5,000 cash in December 2018 for expenses incurred during the next year.

Answer 1

Answer:

Cash Basis and Accrual Basis

Explanation:

We be using the Cash Basis and Accrual Basis method to explain this

If we are going to use cash basis accounting system  

the service revenue will = $105,000  while

Pool Expenses will = $80,000

If we are going to use accrual basis accounting system  

the service revenue = $130,000  while

Pool Expenses = $85,000