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The Situation: Pluto Home Finders, Inc. (PHF), a dog placement service, operates in the Midwestern United States.

The Situation: 

Pluto Home Finders, Inc. (PHF), a dog placement service, operates in the Midwestern United States. During 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 of 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 the $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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