Question

Hightail Hurricane Shutters had the following transactions for the month of June, 2018:

Billed $496,000 in revenues on credit

Received $164,000 from customers’ accounts receivable

Incurred expenses of $194,000 but only paid $87,700 cash for these expenses

Prepaid $32,220 for computer services to be used next month

What was the company’s accrual basis net income for the month?

$ 264,080

None of these answers are correct.

$ 302,000

$ 44,080

$408,300

Hightail Hurricane Shutters had the following transactions for the month of June, 2018:

Billed $496,000 in revenues on credit

Received $164,000 from customers’ accounts receivable

Incurred expenses of $194,000 but only paid $87,700 cash for these expenses

Prepaid $32,220 for computer services to be used next month

What was the company’s cash basis net income for the month?

$ 44,080

$ 264,080

None of these answers are correct.

$408,300

$ 302,000

Answer 1

	Accrual basis	Cash basis
Revenue	496,000	164,000
Expense	194,000	87,700
Computer services	-	32,220
Net Income	302,000	44,080
Correct option	Option 3	Option 1