8) a company had the following transactions during 2024: sales of $9,000 on account collected $4,000 for…

8) a company had the following transactions during 2024: sales of $9,000 on account collected $4,000 for services to be performed in 2025 paid $2,650 cash in salaries purchased airline tickets for $500 cash in december for a trip to take place in what is the companys 2024 net income using cash basis accounting? f) $850 g) $9,850 h) $1,350 j) $1

8) a company had the following transactions during 2024: sales of $9,000 on account collected $4,000 for services to be performed in 2025 paid $2,650 cash in salaries purchased airline tickets for $500 cash in december for a trip to take place in what is the companys 2024 net income using cash basis accounting? f) $850 g) $9,850 h) $1,350 j) $1

Answer

Explanation:

Step1: Identify cash - inflows

Cash inflows are the amounts of cash received. Here, the company collected $4,000 for services to be performed in 2025. Sales on account ($9,000) are not cash inflows under cash - basis accounting. So, cash inflow = $4,000.

Step2: Identify cash - outflows

Cash outflows are the amounts of cash paid. The company paid $2,650 in salaries and $500 for airline tickets. So, total cash outflow=$2,650 + 500= $3,150.

Step3: Calculate net income

Net income under cash - basis accounting is calculated as cash inflows minus cash outflows. Net income = $4,000−3,150 = $850.

Answer:

$850$