Response to the following :
Accrual-Basis Accounting
Refer to problem. Compute income for 2009 assuming that the company uses accrual-basis accounting.
Problem:
Cash-Basis
Accounting A lawn care company started business on January 1, 2009. The company billed clients $85,000 for lawn care services completed in 2009. By December 31, the company had received $61,000 cash from the customers, with the $24,000 balance expected to be collected in 2010. During 2009, the company paid $58,000 cash for various expenses. At December 31, the company still owed $29,000 for additional expenses incurred which have not yet been paid in cash. These expenses will be paid during January 2010. How much income should the company report for 2009?
Note: The company computes income using cash-basis accounting.