In its first year of operations, the Company made $22960 in service revenue, $4920 of which was on account and still outstanding at year-end. The remaining $18040 was received in cash from customers. The company incurred operating expenses of $12956. Of these expenses, $9840 was paid in cash, and $3116 was still owed on account at year-end. CEO prepaid $1968 for insurance that would not be used until the second year of operations. calculate first years net earnings under cash basis accounting, and calculate first years net earnings under the accrual basis of accounting.
In its first year of operations, the Company made $22960 in service revenue, $4920 of which was on account and still outstanding at year-end. The remaining $18040 was received in cash from customers. The company incurred operating expenses of $12956. Of these expenses, $9840 was paid in cash, and $3116 was still owed on account at year-end. CEO prepaid $1968 for insurance that would not be used until the second year of operations. calculate first years net earnings under cash basis accounting, and calculate first years net earnings under the accrual basis of accounting.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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In its first year of operations, the Company made $22960 in service revenue, $4920 of which was on account and still outstanding at year-end. The remaining $18040 was received in cash from customers.
The company incurred operating expenses of $12956. Of these expenses, $9840 was paid in cash, and $3116 was still owed on account at year-end. CEO prepaid $1968 for insurance that would not be used until the second year of operations.
calculate first years net earnings under cash basis accounting, and calculate first years net earnings under the accrual basis of accounting.
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