On Jan. 1, XYZ started a new business. The shareholders made an initial cashinvestment of $1,000,000. During the year, the company provided $10,500,000of services to customers. On December 31, XYZ had a balance in AccountsReceivable of $1,200,000. Also, during the year, the company incurred expensesof $8,800,000 and ended the year with a balance in Accounts Payable of$920,000.What is XYZ's income before income taxes for the year, under the Cash andAccrual basis?A. Cash Basis: $9,300,000 Accrual Basis: $10,500,000B. Cash Basis: $1,700,000 Accrual Basis: $1,420,000C. Cash Basis: $1,420,000 Accrual Basis: $1,700,000D. Cash Basis: $500,000 Accrual Basis: $2,620,000The reed company uses the straight-line method todepreciate its equipment. On May 1, 2007, the companypurchased some equipment for $200,000. The equipment isestimated to have a useful life of ten years and a salvagevalue of $20,000. How much depreciation expense shouldReed record for the equipment in the adjusting entry onDecember 31, 2007?a.$6,000b.$12,000c. $13,500

To compute the income before income taxes: Under Cash BasisIncome before income taxes = (Service…

Answered: On Jan. 1, XYZ started a new business.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On Jan. 1, XYZ started a new business. The shareholders made an initial cash investment of $1,000,000. During the year, the company provided $10,500,000 of services to customers. On December 31, XYZ had a balance in Accounts Receivable of $1,200,000. Also, during the year, the company incurred expenses of $8,800,000 and ended the year with a balance in Accounts Payable of $920,000. What is XYZ's income before income taxes for the year, under the Cash and Accrual basis? A. Cash Basis: $9,300,000 Accrual Basis: $10,500,000 B. Cash Basis: $1,700,000 Accrual Basis: $1,420,000 C. Cash Basis: $1,420,000 Accrual Basis: $1,700,000 D. Cash Basis: $500,000 Accrual Basis: $2,620,000
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