30 Calculate net income before tax on the accrual basis. First yeat of operation

Question

30 Calculate net income before tax on the accrual basis. First yeat of operations the owners deposited $50,000 (in total) in the business. The business got a loan for $75,000. Sales for the first year were $200,000, 75% were received in cash. Cost of sales was $110,000 but $20,000 remains unpaid at year end. Rent was paid for 2 years in advance on January 1. the amount paid was $40,000. Owners withdrew $25,000 frrom the business Bill for $1,600 in advertising expense was received on 12/31/year1. The bill was paid the following year.

Explanation / Answer

Sales revenue 200000 Expenses: Cost of sales 110000 Rent expense 20000 Advertsing expense 1600 Net income 68400

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