Cash flows during the first year of operations for the Harman-Kardon Consulting Company were as follows: Cash collected from customers, $295,000; Cash paid for rent, $31,000; Cash paid to employees for services rendered during the year, $111,000; Cash paid for utilities, $41,000. In addition, you determine that customers owed the company $51,000 at the end of the year and no bad debts were anticipated. Also, the company owed the gas and electric company $1,100 at year-end, and the rent payment was for a two-year period. Calculate accrual net income for the year.

Question

Business

Patricia Garrison

26 July, 09:54

Cash flows during the first year of operations for the Harman-Kardon Consulting Company were as follows: Cash collected from customers, $295,000; Cash paid for rent, $31,000; Cash paid to employees for services rendered during the year, $111,000; Cash paid for utilities, $41,000. In addition, you determine that customers owed the company $51,000 at the end of the year and no bad debts were anticipated. Also, the company owed the gas and electric company $1,100 at year-end, and the rent payment was for a two-year period. Calculate accrual net income for the year.

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Answers (1)

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Curtis Robbins · Answer 1

Accrued net income is $161,900

Explanation:

The formula to compute accrued net income is shown below:

= Revenue - expenses

where,

Revenue = Cash collected from customers + customers owed the company

= $295,000 + $51,000

= $346,000

And, the expenses equals to

= Cash paid for rent + Cash paid to employees for services rendered during the year + Cash paid for utilities + gas and electric expenses at the end of a year

= $31,000 + $111,000 + $41,000 + $1,100

= $184,100

Now put these values to the above formula

So, the answer would be equal to

= $346,000 - $184,100

= $161,900