Cornerstone Exercise 3-15 (Algorithmic) Expense Recognition (or Matching) Principle

The following information describes transactions for Morgenstern Advertising Company during July:

1. On July 5, Morgenstern purchased and received $24,300 of supplies on credit from Drexel Supply Inc. During July, Morgenstern paid $20,000 cash to Drexel and used $17,850 of the supplies.
2. Morgenstern paid $8,800 to salespeople for salaries earned during July. An additional $910 was owed to salespeople at July 31 for salaries earned during the month.
3. Paid $2,950 to the local utility company for electric service. Electric service in July was $2,300 of the $2,950 total bill.

Required:

1. Calculate the amount of expense recognized in July under cash-basis accounting. $

2. Calculate the amount of expense recognized in July under accrual-basis accounting. $