Calculate net income for under accrual basis of accounting

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In its first year of operations, 2020, Martinez Corp. invoiced $187,000 in service revenue. Of that amount, $22,000 was still owing from customers at the end of year. In 2020, Martinez incurred various operating expenses totalling $91,000, of which $83,000 was paid in cash. Salaries and wages paid to employees totalled $75,000 and $2,000 was still owing at the end of the year. In addition, Martinez prepaid $5,600 for insurance coverage that covered the last half of 2020 and the first half of 2021. Martinez estimates it will owe $8,800 in income tax when it files its corporate income tax return after its 2020 year end.

Question 1: Calculate the net income for 2020 under the accrual basis of accounting.

Question 2: Calculate the net income for 2020 under the cash basis of accounting.

Reference no: EM132678940

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