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 February and ________ using the accrual basis.

Question

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Using the cash basis:
- In January, they collected $200 x 15 = $3,000
- In February, they collected $200 x 10 = $2,000 from pre-paid customers and $0 from regular customers
- In March, they collected $200 x 5 = $1,000

Total collected in the first quarter = $14,000
So, they collected $14,000 - ($3,000 + $2,000 + $1,000) = $8,000 from regular customers in the first quarter.

Therefore, in February, they recognized $2,000 in revenue (from the pre-paid customers) using the cash basis.

Using the accrual basis:
- In January, they recognized $3,000 in revenue (from the pre-paid customers) and $0 from regular customers
- In February, they recognized $4,000 in revenue ($2,000 from pre-paid customers and $2,000 from regular customers)
- In March, they recognized $6,000 in revenue ($1,000 from pre-paid customers and $5,000 from regular customers)

Therefore, in February, they recognized $4,000 in revenue using the accrual basis.

Angelo's Charges $200 Per Month for Catering Services