Concordia Industries collected $105,903 from customers in 2014. Of the amount co

Question

Concordia Industries collected $105,903 from customers in 2014. Of the amount collected, $27,101 was from revenue accrued from services performed in 2013. In addition, Concordia recognized $45,147 of revenue in 2014, which will not be collected until 2015.

Concordia Industries also paid $72,733 for expenses in 2014. Of the amount paid, $30,995 was for expenses incurred on account in 2013. In addition, Concordia incurred $36,045 of expenses in 2014, which will not be paid until 2015.

(a) Compute 2014 cash-basis net income.

(b) Compute 2014 accrual-basis net income.

Explanation / Answer

a) 2014 cash-basis net income = 105903 - 72733 = 33710

b) 2014 accrual-basis net income

105903 - 27101 + 45147 = 123949

72733 - 30995 + 36045 = 77783

123949 - 77783 = 46166

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