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In the course of your examination of the books and records of Karen Company, you find the following data:

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In the course of your examination of the books and records of Karen Company, you find the following data;Salaries earned by employees in 2009 $61,000;Salaries paid in 2009 53,000;Total sales revenue in 2009 927,000;Cash collected from sales in 2009 952,000;Utilities expense incurred in 2009 7,500;Utility bills paid in 2009 6,300;Cost of goods sold in 2009 602,000;Cash paid on purchases in 2009 613,000;Inventory at December 31, 2009 416,000;Tax assessment for 2009 6,210;Taxes paid in 2009 5,930;Rent Expense for 2009 36,000;Rent paid in 2009 41,000;Required;1. Compute Karen?s net income for 2009 using cash-basis accounting;2. Compute Karen?s net income for 2009 using accrual-basis accounting;3. Why is accrual-basis accounting normally used?

 

Paper#25592 | Written in 18-Jul-2015

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