Answer:
Harman-Kardon Consulting Company
Calculating the Accrual Net Income:
= $164,800
Explanation:
a) Data and Calculations:
Sales Revenue:
Cash collected from customers = $300,000
Accounts receivable at year end 52,000
Total Sales Revenue = $352,000
Utilities Expense:
Cash paid for utilities = $42,000
Utilities payable 1,200
Total utilities expense $43,200
Accrual net income:
Sales revenue $352,000
Expenses:
Rent 32,000
Salaries 112,000
Utilities 43,200 (187,200)
Net income $164,800
b) Accrual net income is determined on the accrual basis of accounting. This basis takes into account all accrued expenses and revenue, all prepaid expenses and revenue received in advance, and provides for depreciation expenses, unlike the cash basis of accounting.
