TNT Inc charges $125 per month for a storage unit. In the first quarter of the year, they collected $6,125. Ten customers pre-paid for three months rental in January, seven customers pre-paid for two months rental in February, and five customers paid for one month in March. Using the cash basis of accounting, TNT will recognize ________ in revenue for March and ________ using the accrual basis
A) $0, $3,375
B) $625, $0
C) $1,250, $2,500
D) $625, $2,750
Answer: D
Explanation: D) Cash basis recognizes cash collected in March ($125 × 1 month × 5 people). Accrual recognizes the amount earned in March ($125 for March × 22 people).
Business
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