Melody's Piano School operations for the month of May were limited to the following transactions:
-Provided $400 of piano lessons to students who paid in cash.
-Provided $100 of piano lessons on account.
-Collected $300 from students who took piano lessons during April.
-Paid April's piano rental bill of $100.
-Received May's piano rental bill of $150 and set it aside for payment in June.
-Use the information above to answer the following question.Assuming the company uses accrual basis accounting,what is net income for May?
A) $400.
B) $300.
C) $350.
D) $600.

Question

Quizplus · Accepted Answer

The $400 of cash received for piano lessons is revenue for May.
The $100 of piano lessons on account is also revenue for May (even though payment has not yet been received).
The $300 received from students who took piano lessons during April is not revenue for May, as it pertains to the previous month's operations.
The rental expense of $100 for April is an expense for May.
The May's piano rental bill of $150 is not an expense for May, as it will be paid in June.
Therefore, the net income for May is $400 (cash revenue) + $100 (accounts receivable revenue) - $100 (rental expense) = $400 + $100 - $100 = $350.

Melody's Piano School Operations for the Month of May Were