Question

Exercise 218 a-b

Hal Corp. prepared the following income statement using the cash basis of accounting:

HAL CORP. Income Statement, Cash Basis For the Year Ended December 31, 2020
Service revenue (does not include $25,000 of services rendered on account
because the collection will not be until 2021)		$370,000
Expenses (does not include $15,000 of expenses on account because
payment will not be made until 2021)		220,000
Net income		$150,000

Additional data:

1.		Depreciation on a company automobile for the year amounted to $6,000. This amount is not included in the expenses above.
2.		On January 1, 2020, paid for a two-year insurance policy on the automobile amounting to $1,800. This amount is included in the expenses above.

Recast the above income statement on the accrual basis in conformity with generally accepted accounting principles. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)


a. What is the value of Service Revenue?

b. What is the value of Expenses?

c. What is Net Income/Loss?

Answer 1