Newman Consulting Company
Cash Basis
Newman Consulting Company maintains its records on a cash
basis. During 2021 the following cash flows were recorded for
services provided for 2021, 2022, and 2023: cash received for
services rendered to clients, $420,000; and cash paid for salaries
($240,000), utilities ($35,000), and advertising ($12,000),
respectively for the entire three years at an equal amount.
Accrual Basis
Instructions: Prepare the net income for each year.
Newman Consulting Company maintains its records on an
accrual basis. The following cash amounts were recorded for
services provided for 2021, 2022, and 2023: total cash received
for each year was $140,000 for services rendered to clients, and
cash paid for salaries, utilities, and advertising totaled $240,000,
$35,000, and $12,000, respectively for the three years at an
equal amount.
