Question

Blossom Industries collected $105,000 from customers in 2019. of the amount collected, $24,600 was for services performed in 2018. In addition, Blossom performed services worth $40,100 in 2019, which will not be collected until 2020 Blossom Industries also paid $72,200 for expenses in 2019. of the amount paid, $29,800 was for expenses incurred on account in 2018. In addition, Blossom incurred $43,000 of expenses in 2019, which will not be paid until 2020. Compute 2019 cash-basis net income. Cash-basis net income (b) Compute 2019 accrual basis net income Accrual-basis net incomes

Answer 1

a	Computation of Net Income under cash basis
	Total Cash Receipt	$                                1,05,000
	Less:Total Cash expenses	$                                   72,200
	Net Income	$                                   32,800
b	Computation of Net Income under accrual basis
	Income recognized: For 2019-$105,000-$24,600 =$80,400+$40,100 =$120500	$                                1,20,500
	Less:Expenses incurred: For 2019-$72,200-$29,800+$43,000 =$85,400	$                                   85,400
	Net Income	$                                   35,100