Chef’s Catering completed the following selected transactions during May 2023:

Required

1. Show whether each transaction would be handled as a revenue or an expense using both the cash-basis and accrual-basis accounting systems by completing the following table. (Expenses should be shown in parentheses.) Also, indicate the dollar amount of the revenue or expense. The May 1 transaction has been completed as an example.

2. After completing the table, calculate the amount of net income or net loss for Chef’s Catering under the accrual-basis and cash-basis accounting systems for May.

3. Considering your results from Requirement 2, which method gives the best picture of the true earnings of Chef’s Catering? Why?

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May 1 5 9 14 23 31 31 31 Prepaid rent for 3 months, $2,400. Received and paid electricity bill, $700. Received cash for meals served to customers, $2,600. Paid cash for kitchen equipment, $3,000. Served a banquet on account, $2,800. Made the adjusting entry for rent (from May 1). Accrued salaries expense, $1,600. Recorded amortization for May on kitchen equipment, $50.