Question

Payson Sports, Inc., sells sports equipment to customers. Its fiscal year ends on December 31. The following transactions occurred in 2015:
a. Purchased $250,000 of new sports equipment inventory; paid $90,000 in cash and owed the rest on account.
b. Paid employees $180,300 in wages for work during the year; an additional $3,700 for 2015 wages will be paid in January 2016.
c. Sold sports equipment to customers for $750,000; received $500,000 in cash and the rest on account. The cost of the equipment was $485,000.
d. Paid $17,200 cash for utilities for the year.
e. Received $70,000 from customers as deposits on orders of new winter sports equipment to be sold to the customers in January 2016.
f. Received a $1,930 bill for December 2015 utilities that will be paid in January 2016.

Required:
1. Complete the following statements:


2. Which basis of accounting (cash or accrual) provides more useful information to investors, creditors, and other users?Why?


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  • CreatedJuly 01, 2014
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