Rebel Technology maintains its records using cash-basis accounting. During the y

Question

Rebel Technology maintains its records using cash-basis accounting. During the year, the company received cash from customers, $44,000, and paid cash for salaries, $24,000. At the beginning of the year, customers owe Rebel $1,100. By the end of the year, customers owe $6,800. At the beginning of the year, Rebel owes salaries of $5,800. At the end of the year, Rebel owes salaries of $3,400.

Determine cash-basis net income and accrual-basis net income for the year.

Cash-basis net income: __________

Accrual-basis net income: __________

Explanation / Answer

Cash Basis:

Revenue: $44,000

Less Expenses: ($24,000)

Net Income : $20,000

Acrual Basis:

Revenue: $44,000 - 1,100 + 6,800 = $49,700

Expenses: $24,000 - 5,800 + 3,400 = ($21,600)

Net Income : = $28,100

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