Angelo's charges $200 per month for catering services.In the first quarter of the year,they collected $14,000.Fifteen customers pre-paid for three months of catering beginning in January,ten customers pre-paid for two months of catering beginning in February,and five customers paid for one month of catering in March.Using the cash basis of accounting,Angelo's will recognize ________ in revenue for January and ________ using the accrual basis.

Question

Quizplus · Accepted Answer

Under the cash basis, Angelo's recognizes revenue when cash is received. In January, they received $9,000 from fifteen customers pre-paying for three months ($200 x 15 x 3). Under the accrual basis, revenue is recognized when earned, so for January, they recognize $3,000 from the fifteen customers for that month ($200 x 15).

Angelo's Charges $200 Per Month for Catering Services