Pluto Home Finders, Inc. (PHF), a dog placement service, operates in the Midwestern United States. In 2015 the company earned $145,000 in revenue by providing services to customers. However, it collected only $120,000 of the revenue in cash. PHF expects to collect the remaining $25,000 in 2016. In addition, PHF incurred $80,000 in expenses. However, by the end of 2015, PHF had paid only $75,000 of the cash owed for expenses because it had not yet paid $5,000 to employees who had worked during 2015 but had not been paid by the end of the year. PHF expects to pay $5,000 in cash to the employees during 2016. Based on this information alone, what amount of net income should PHF report on its 2015 financial statements?
Pluto Home Finders, Inc. (PHF), a dog placement service, operates in the Midwestern United States. In 2015 the company earned $145,000 in revenue by providing services to customers. However, it collected only $120,000 of the revenue in cash. PHF expects to collect the remaining $25,000 in 2016. In addition, PHF incurred $80,000 in expenses. However, by the end of 2015, PHF had paid only $75,000 of the cash owed for expenses because it had not yet paid $5,000 to employees who had worked during 2015 but had not been paid by the end of the year. PHF expects to pay $5,000 in cash to the employees during 2016. Based on this information alone, what amount of net income should PHF report on its 2015 financial statements?
Chapter9: Deductions: Employee And Self-employed-related Expenses
Section: Chapter Questions
Problem 25P
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Transcribed Image Text:Pluto Home Finders, Inc. (PHF), a dog placement service,
operates in the Midwestern United States. In 2015 the
company earned $145,000 in revenue by providing
services to customers. However, it collected only
$120,000 of the revenue in cash. PHF expects to collect
the remaining $25,000 in 2016. In addition, PHF incurred
$80,000 in expenses. However, by the end of 2015, PHF
had paid only $75,000 of the cash owed for expenses
because it had not yet paid $5,000 to employees who
had worked during 2015 but had not been paid by the
end of the year. PHF expects to pay $5,000 in cash to
the employees during 2016.
Based on this information alone, what amount of net
income should PHF report on its 2015 financial
statements?
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