Leno Inc. collected $500,000 from customers in 2011. Of the amount collected, $125,000 was from revenue earned on account in 2010. In addition, Leno earned $240,000 of revenue in 2011, which will not be collected until 2012. Leno Inc. also paid $170,000 for expenses in 2011. Of the amount paid, $30,000 was for expenses incurred on account in 2010. In addition, Leno incurred $142,000 of expenses in 2011 which will not be paid until 2012.
Instructions:
a. Compute 2011 cash-basis net income.
b. Compute 2011 accrual-basis net income.