Purrfect Pets,Inc.provides animal daycare for $25 per day.Customers buy three month packages,which provide 15 days of care per month.In January they received cash payments from 10 customers.For the month of January,they will recognize ________ of revenue under the cash basis,and ________ of revenue under the accrual basis.

Question

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Under the cash basis, revenue is recognized when cash is received, so $11,250 (10 customers x $1,125 per package) is recognized. Under the accrual basis, revenue is recognized when earned, so $3,750 (10 customers x 15 days x $25 per day) is recognized for January.