01. abbott corp. collected $100,000 from customers in 2022 of which $70,000 was from revenue earned on…

01. abbott corp. collected $100,000 from customers in 2022 of which $70,000 was from revenue earned on account in 2021. in addition, abbott corp. earned $57,000 of revenue in 2022 which will not be collected until 2023. in 2022, abbott corp. paid $80,000 for expenses. of this amount paid, $30,000 was for expenses incurred on account in 2021. in addition, abbott corp. also incurred $5,000 expenses in 2022, which will not be paid until 2023. based on the above information, what are abbott corporations 2022 cash - basis and accrual - bases net income?\n\n$20,000 and 52,000, respectively.\n\n$20,000 and 32,000, respectively.\n\n$15,000 and 52,000, respectively.\n\n$15,000 and 32,000, respectively.

01. abbott corp. collected $100,000 from customers in 2022 of which $70,000 was from revenue earned on account in 2021. in addition, abbott corp. earned $57,000 of revenue in 2022 which will not be collected until 2023. in 2022, abbott corp. paid $80,000 for expenses. of this amount paid, $30,000 was for expenses incurred on account in 2021. in addition, abbott corp. also incurred $5,000 expenses in 2022, which will not be paid until 2023. based on the above information, what are abbott corporations 2022 cash - basis and accrual - bases net income?\n\n$20,000 and 52,000, respectively.\n\n$20,000 and 32,000, respectively.\n\n$15,000 and 52,000, respectively.\n\n$15,000 and 32,000, respectively.

Answer

Explanation:

Step1: Calculate cash - basis net income

Cash - basis revenue is the amount actually collected in 2022, which is $100,000. Cash - basis expenses is the amount actually paid in 2022, which is $80,000. Cash - basis net income = Cash - basis revenue - Cash - basis expenses = $100,000 - $80,000 = $20,000.

Step2: Calculate accrual - basis net income

Accrual - basis revenue in 2022 is the revenue earned in 2022, which is $57,000 (revenue earned in 2022 but to be collected in 2023) plus the portion of 2022 collections that was not from 2021 revenue. The amount from 2021 revenue in collections is $70,000, so the 2022 - earned revenue in collections is $100,000 - $70,000=$30,000. So total accrual - basis revenue = $30,000 + $57,000=$87,000. Accrual - basis expenses in 2022 is the expenses incurred in 2022. The amount paid in 2022 for 2021 expenses is $30,000, so the 2022 - incurred expenses paid in 2022 is $80,000 - $30,000 = $50,000, and the 2022 - incurred expenses to be paid in 2023 is $5,000. So total accrual - basis expenses = $50,000 + $5,000=$55,000. Accrual - basis net income = Accrual - basis revenue - Accrual - basis expenses = $87,000 - $55,000 = $32,000.

Answer:

$20,000 and $32,000, respectively.