Angelo's charges $280 per month for catering services. In the first quarter of the year, they collected $19,600. 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, revenue is recognized when cash is received. In January, 15 customers pre-paid for three months, totaling $12,600 (15 x $280 x 3). Under the accrual basis, revenue is recognized when earned. In January, only one month of service is provided to 15 customers, totaling $4,200 (15 x $280).

Angelo's Charges $280 Per Month for Catering Services