Concordia Industries collected $105,711 from customers in 2014. Of the amount co
ID: 2503144 • Letter: C
Question
Concordia Industries collected $105,711 from customers in 2014. Of the amount collected, $27,955 was from revenue accrued from services performed in 2013. In addition, Concordia recognized $43,876 of revenue in 2014, which will not be collected until 2015.
Concordia Industries also paid $73,626 for expenses in 2014. Of the amount paid, $29,810 was for expenses incurred on account in 2013. In addition, Concordia incurred $38,350 of expenses in 2014, which will not be paid until 2015.
(a) Compute 2014 cash-basis net income.
(b) Compute 2014 accrual-basis net income.
Explanation / Answer
(a)<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Net Income computed on Cash Basis
Particulars
Amount
in ($)
Collections from Customers
105,711
(Less) Payment for Expenses
(73,626)
Net Income
32,085
Net Income as on Cash Basis is <?xml:namespace prefix = v ns = "urn:schemas-microsoft-com:vml" />
(b)
Computation of Net Income on Accrual Basis
Particulars
Amount
in ($)
Revenue Accrued in 2014
121,632
(Less) Expense incurred in 2014
(82,166)
Net Income
39,466
Net Income as per Accrual Basis of Accounting is
Workings:
(1) Revenue accrued during 2014
= Collections during 2014 - +
= $ 105,711 - $ 27,955 + $ 43,876
= $ 121,632
(2) Expense incurred during 2014
= Paid during 2014
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.