In its first year of operations, maria Corp earned 48100 in service revenue. On that amount 8200 was on account and the remainder 39900 was collected in cash from customers. The company incurred various expenses totalling 32300 of which 28800 was paid in cash. At year end3500 was still owing on account. In addition Maria prepaid 2,000 for insurance coverage that covered the last half of the first year and the first half of the second year. Maria expects to owe 3,000 of income tax when it files its corporate income tax return after the year end. Calculate the first years net income under the cash basis if accounting.
In its first year of operations, maria Corp earned 48100 in service revenue. On that amount 8200 was on account and the remainder 39900 was collected in cash from customers. The company incurred various expenses totalling 32300 of which 28800 was paid in cash. At year end3500 was still owing on account. In addition Maria prepaid 2,000 for insurance coverage that covered the last half of the first year and the first half of the second year. Maria expects to owe 3,000 of income tax when it files its corporate income tax return after the year end. Calculate the first years net income under the cash basis if accounting.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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In its first year of operations, maria Corp earned 48100 in service revenue. On that amount 8200 was on account and the remainder 39900 was collected in cash from customers.
The company incurred various expenses totalling 32300 of which 28800 was paid in cash. At year end3500 was still owing on account. In addition Maria prepaid 2,000 for insurance coverage that covered the last half of the first year and the first half of the second year. Maria expects to owe 3,000 of income tax when it files its corporate income tax return after the year end.
Calculate the first years net income under the cash basis if accounting.
Transcribed Image Text:In its first year of operations, Maria Corp. earned $48,100 in service revenue. Of that amount, $8,200 was on account and the
remainder, $39,900, was collected in cash from customers.
The company incurred various expenses totalling $32,300, of which $28,800 was paid in cash. At year end, $3,500 was still owing on
account. In addition, Maria prepaid $2,000 for insurance coverage that covered the last half of the first year and the first half of the
second year. Maria expects to owe $3,000 of income tax when it files its corporate income tax return after year end.
(a)
Your answer is correct.
Calculate the first year's net income under the accrual basis of accounting.
Net income under accrual basis
$
11,800
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Transcribed Image Text:(b)
Your answer is incorrect.
Calculate the first year's net income under the cash basis of accounting.
Net income under cash basis $
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