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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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(Appendix 3.1) Vickelly Company uses cash-basis accounting. At the end of the current year, Vickelly’s checkbook shows cash receipts from customers of $112,000 and cash payments for operating expenses of $48,000 for the year. At the end of the year. Vickelly determined that customers owed it $12,000, and it owed creditors $1 0,000. Compute Vickelly’s sales revenue, operating expenses, and net income on an accrual basis.

To determine

Compute sales revenue, operating expenses and net income on an accrual basis of Company V.

Explanation

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Compute sales revenue of Company V.

Sales revenue = Cash receipts +Accounts receivable at year end=$112,000 +$12,000=$124,000

Therefore, sales revenue of Company V is $124,000.

Calculate operating expense

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