Sample prob - end of the year You receive an additional $2,000 cash for work completed throughout the year You incur $3,000 of operating expenses

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
On March 1, 2006, you invest $20,000 of your own money into a new business. You also borrow $8,000 at 8% annual interest rate. You purchase $5000 of supplies on account and put $7,000 down on equipment costing $16,000, financing the balance, interest free. The depreciation on the equipment is straight-line, over 5 years. You receive $3,000 prepayment for services to be completed in the future, of which 80% is completed by the
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: end of the year. You receive an additional $2,000 cash for work completed throughout the year. You incur $3,000 of operating expenses, of which $1,000 is still owed at years end. At years end, you have $2,000 of supplies remaining, and the payable balance for the supplies is $500. The balance owed on the equipment is $8,000. Using this information calculate the 1) accrual basis net income and 2) the cash basis net income?...
View Full Document

This note was uploaded on 11/13/2010 for the course BUS BUS 371 taught by Professor Wray during the Fall '07 term at Peru State.

Ask a homework question - tutors are online