Submit a new income statement applying the accrual income

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Reference no: EM132828164

Problem - Cash Flow Income vs. Accrual (GAAP) Income

ABC Corporation is a new company. It determines net income using a "cash basis" method. Its income statement for the first period appears below:

ABC Corporation Income Statement (Cash Basis)

Revenue $25,000

Expenses

Supplies $(2,000)

Equipment $(12,000)

Salaries $(4,000)

Net Income $7,000

Required - You determine the following:

(1) $7,000 of the revenues represent advance payments for work not completed by ABC.

(2) Supplies on hand as of the end of the period amount to $1,500.

(3) The equipment has an expected life of 5 years, and an expected salvage value of $2,000.

Required - Using EXCEL submit a new income statement applying the accrual income (GAAP) principles.

Reference no: EM132828164

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