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Primo Industries collected $105,000 from customers in 2014. Of the amount collected, 25,000 was from services performed in 2013. In addition, Primo performed services worth $40,000 in 2014, which will not be collected until 2015.
Primo Industries also paid $72,000 for expenses in 2014. Of the amount paid, $30,000 was for expenses incurred on account in 2013. In addition, Primo incurred $42,000 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.
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The discount on bonds payable amount
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Describe the audit procedures which Johnson would conduct to find out if Mother earth would violated the debt covenants.
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