Reference no: EM132986326

Question - In its first year of operations, Maria Corp. earned $48,100 in service revenue. Of that amount, $8,200 was on account and the remainder, $39,900, was collected in cash from customers.

The company incurred various expenses totalling $32,300, of which $28,800 was paid in cash. At year end, $3,500 was still owing on account. In addition, Maria prepaid $2,000 for insurance coverage that covered the last half of the first year and the first half of the second year. Maria expects to owe $3,000 of income tax when it files its corporate income tax return after year end.

Required - Calculate the first year's net income under the cash basis of accounting.