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What is the income under accrual basis?

What is the income under accrual basis?

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter21: The Statement Of Cash Flows
Section: Chapter Questions
Problem 5MC
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What is the income under accrual basis?

Frappe Company provided the following data for the current year: Cash sales P2,500,000 Inventory - Jan 1 P500,000 Inventory - Dec 31 Accrued expense - Dec 31 Sales on account 850,000 600,000 Cash purchases 1,700,000 20,000 Credit purchases 400,000 Prepaid expense - Dec 31 30,000 Expenses paid 750,000 Equipment – Dec 31 1,000,000 Accounts Receivable - Jan 1 250,000 Interest received 40,000 Account Receivable – Dec 31 300,000 Interest receivable - Jan 1 10,000 Accounts Payable - Jan 1 150,000 Interest receivable – Dec 31 20,000 Accounts Payable - Dec 31 200,000 On July 1 of the current year, an equipment was acquired for P200,000. The terms are P50,000 down and the balance to be paid after one year. The useful life is 10 years with no residual value.
Transcribed Image Text:Frappe Company provided the following data for the current year: Cash sales P2,500,000 Inventory - Jan 1 P500,000 Inventory - Dec 31 Accrued expense - Dec 31 Sales on account 850,000 600,000 Cash purchases 1,700,000 20,000 Credit purchases 400,000 Prepaid expense - Dec 31 30,000 Expenses paid 750,000 Equipment – Dec 31 1,000,000 Accounts Receivable - Jan 1 250,000 Interest received 40,000 Account Receivable – Dec 31 300,000 Interest receivable - Jan 1 10,000 Accounts Payable - Jan 1 150,000 Interest receivable – Dec 31 20,000 Accounts Payable - Dec 31 200,000 On July 1 of the current year, an equipment was acquired for P200,000. The terms are P50,000 down and the balance to be paid after one year. The useful life is 10 years with no residual value.
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