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

6) 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 $3,750 cash in salaries for 2024 purchased airline tickets for $500 in december for a trip to take place in 2025 what is the companys 2024 net income using accrual basis accounting? f) $5,250 g) $5,750 h) $9,250

6) 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 $3,750 cash in salaries for 2024 purchased airline tickets for $500 in december for a trip to take place in 2025 what is the companys 2024 net income using accrual basis accounting? f) $5,250 g) $5,750 h) $9,250

Answer

Explanation:

Step1: Identify revenue for 2024

Sales on - account of $9,000 are recognized as revenue in 2024 under accrual - basis accounting. The $4,000 collected for 2025 services is not 2024 revenue. So, 2024 revenue $R = 9000$.

Step2: Identify expenses for 2024

Salaries of $3,750 are a 2024 expense. The $500 for 2025 airline tickets is not a 2024 expense. So, 2024 expense $E=3750$.

Step3: Calculate net income

Net income $NI$ is calculated as revenue minus expense. $NI = R - E$. Substitute $R = 9000$ and $E = 3750$ into the formula: $NI=9000 - 3750=5250$.

Answer:

$f) $5,250$