Reference no: EM133106446

Question - AA Trading reported the following accounts during the year

2020:

Cash Sales - 700,000

Sales on Account - 300,000

Collections of Acc Rec - 100,000

Collections of Advances from Customers - 50,000

Cash Purchases - 400,000

Purchases on Account - 200,000

Merchandise Inventory, Dec. 31, 2020 - 100,000

Sales Expenses (80% paid) - 150,000

Cash Advances to Employees - 20,000

Bad Debts Expense - 5,000

Depreciation Expense - 10,000

Required - If AA uses cash basis accounting, what would be its net income? Strictly show your solution.