In its first year of operations, 2020, Marigold Corp. invoiced $185,000 in service revenue. Of that amount, $20,000 was still owing from customers at the end of year. In 2020, Marigold incurred various operating expenses totalling $91,000, of which $82,000 was paid in cash. Salaries and wages paid to employees totalled $75,000 and $2,400 was still owing at the end of the year. In addition, Marigold prepaid $5,500 for insurance coverage that covered the last half of 2020 and the first half of 2021. Marigold estimates it will owe $8,600 in income tax when it files its corporate income tax return after its 2020 year end. a. Calculate the net income for 2020 under the accrual basis of accounting. b. Calculate the net income for 2020 under the cash basis of accounting.
In its first year of operations, 2020, Marigold Corp. invoiced $185,000 in service revenue. Of that amount, $20,000 was still owing from customers at the end of year. In 2020, Marigold incurred various operating expenses totalling $91,000, of which $82,000 was paid in cash. Salaries and wages paid to employees totalled $75,000 and $2,400 was still owing at the end of the year. In addition, Marigold prepaid $5,500 for insurance coverage that covered the last half of 2020 and the first half of 2021. Marigold estimates it will owe $8,600 in income tax when it files its corporate income tax return after its 2020 year end. a. Calculate the net income for 2020 under the accrual basis of accounting. b. Calculate the net income for 2020 under the cash basis of accounting.
Chapter14: Corporation Accounting
Section: Chapter Questions
Problem 20EB: Trumpet and Trombone Manufacturing, Inc. began the year with a retained earnings balance of...
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In its first year of operations, 2020, Marigold Corp. invoiced $185,000 in service revenue. Of that amount, $20,000 was still owing from customers at the end of year. In 2020, Marigold incurred various operating expenses totalling $91,000, of which $82,000 was paid in cash. Salaries and wages paid to employees totalled $75,000 and $2,400 was still owing at the end of the year. In addition, Marigold prepaid $5,500 for insurance coverage that covered the last half of 2020 and the first half of 2021. Marigold estimates it will owe $8,600 in income tax when it files its corporate income tax return after its 2020 year end.
a. Calculate the net income for 2020 under the accrual basis of accounting.
b. Calculate the net income for 2020 under the cash basis of accounting.
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