Wang Company had the following transactions during 2022:
$\bullet$Sales of $10800 on account
$\bullet$Collected $4800 for services to be performed in 2023
$\bullet$Paid $2600 cash in salaries
$\bullet$Purchased airline tickets for $600 in December for a trip to take place in 2023
What is Wang's 2022 net income using cash basis accounting?

Question

Wang Company had the following transactions during 2022: 
$\bullet$Sales of $10800 on account
$\bullet$Collected $4800 for services to be performed in 2023
$\bullet$Paid $2600 cash in salaries
$\bullet$Purchased airline tickets for $600 in December for a trip to take place in 2023
What is Wang's 2022 net income using cash basis accounting?

Quizplus · Accepted Answer

Net income using cash basis accounting is calculated by subtracting cash expenses from cash revenues. In this case, cash revenues are $10,800 + $4,800 = $15,600. Cash expenses are $2,600 + $600 = $3,200. Therefore, net income is $15,600 - $3,200 = $12,400.

Wang Company Had the Following Transactions During 2022 ∙\bullet∙ Sales of $10800 on Account

Wang Company Had the Following Transactions During 2022 $\bullet$ Sales of $10800 on Account