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How much net income loss should daniel report for the year

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Reference no: EM13480464

1.On December 31, Daniel McGrath completed the first year of operations for his new business. The following data are available from the company's accounting records:

  • Sales to customers $265,000
  • Collections from customers 185,00
  • Inerest earned and received on savings accounts 1,100
  • Amount paid January 1 for one and one-half years' rent 18,000
  • Cost of goods sold $123,000
  • Cost of goods sold 123,000
  • Amount paid to supplier for materials 104,500
  • Wages paid to employees 71,000
  • Wages owed to employees at year-end 3,500
  • Interest due at 12/31 on a loan to be paid the middle of next year 950

a. How much net income (loss) should Daniel report for the year ended December 31 according to (a) cash-basis accounting and (b) accrual-basis accounting?

b. Which basis of accounting provides the better measure of operating results for Daniel?

Reference no: EM13480464

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