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Conan Industries collected $100,000 from customers in 2010. Of the amount collected, $25,000 was from revenue earned on account in 2009. In addition, Conan earned $40,000 of revenue in 2010, which will not be collected until 2011. Conan Industries also paid $70,000 for expenses in 2010. Of the amount paid, $30,000 was for expenses incurred on account in 2009. In addition, Conan incurred $42,000 of expenses in 2010, which will not be paid until 2011.
Instructions
(a) Compute 2010 cash-basis net income.
(b) Compute 2010 accrual-basis net income.
The accounting industry has been wrestling with changing the rules regarding operating and capital leases.
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