Answer:
net income cash-basis 8,000
income accrual-basis 7,900
Explanation:
cash revenues 32,000
salaries expense (24,000)
net income cash-basis 8,000
sales for the period:
beginning AR + sales - collected = ending AR
3,000 + sales - 32,000 = 5,500
sales = 34,500
salaries expense:
beginning salaries payables + salaries - paid = ending salaries payable
3,100 + salaries - 24,000 = 5,700
salaries 26,600
revenues 34,500
salaries (26,600)
income accrual-basis 7,900
Answer:
Cash-basis net income: $8,000
Accrual-basis net income: $7,900
Explanation:
A company maintains its records using cash-basis accounting. During the year, the company received cash from customers, $32,000, and paid cash for salaries, $24,000. At the beginning of the year, customers owe the company $3,000. By the end of the year, customers owe $5,500. At the beginning of the year, the company owes salaries of $3,100. At the end of the year, the company owes salaries of $5,700. Therefore, the Cash-basis net income is $8,000 and the Accrual-basis net income is $7,900.
