In P4.6B, cash receipts and payments were given for The Sharp Edge Ltd. and converted to an accrual basis.

Instructions
(a) Calculate total revenue, total expense, and net income that would be reported if Sharp Edge used the cash basis of accounting.
(b) Compare the cash-based net income calculated in part (a) with the accrual-based net income calculated in P4.6B part (b) (1).
(c) Which method do you recommend Sharp Edge use and why?

Transcribed Image Text:

Cash Receipts Cash Payments Issue of common shares Ski and snowboard repair services Repair equipment Rent Insurance Advertising Utility bills Salaries Income tax $20,000 66,500 $47,040 9,100 2,760 920 1,900 14,200 5.000 $80,920 $86,500