[arlisa67]

In its first year of operations, Harden Co. earned $39,000 in revenues and received $33,000 cash from
These customers. The company incurred expenses of $22,500 but had not paid $2,250 of them at yearend.
Harden also prepaid $3,750 cash for expenses that would be incurred the next year. Calculate
The first year’s net income under both the cash basis and the accrual basis of accounting.

[codyman144]

Please post in homework section and try to answer the question first before posting it.

I am asking the post to be moved.

[codyman144]

Income under the cash basis.
----------------------------------

Cash received -------------------------$33,000
less.-------------------------------------=====
Cash Paid ------$22,500 - $2,250-----$20,250
-------------------------------------------=====
NET --------------------------------------$12,750
--------------------------------------------=====

______________________________________

Accrual Basis.
_____________

Revenue----------------------------------$39,000
Less
Expenses---$22,500 - $ 3,750----------$18,750
--------------------------------------------______
NET ---------------------------------------$20,250
--------------------------------------------=====

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Let them at least TRY to answer the question. Doing their homework for them is not helping!

[aleonard77]

Why don't we count the prepaid expenses in either the cash basis or the accural basis? I'm confused on that part