Chance Corporation Began Operating a New Retail Business in the Current

question 48

Essay

Chance Corporation began operating a new retail business in the current year and had $500,000 of sales,$70,000 of which had not been collected by year-end.Total purchases were $350,000 on which $30,000 is still owed.Ending inventory is $60,000; operating expenses are $170,000,$50,000 of which is still owed at year-end.
a.Compute net income from the business under the accrual method.
b.Compute net income from the business under the cash method.
c.Would paying the $50,000 she owes for operating expenses before year-end change her net income under the accrual method? Under the cash method?

---

Definitions:

Capacity

The maximum amount that something can contain or produce, or the ability to perform, understand, or absorb something.

Flightless Birds

Birds that have evolved in such a way that they are unable to fly, often having smaller wing bones and a heavier, more robust body structure.

Biogeographical

Pertaining to the distribution of plants and animals in different regions and ecosystems across the world.

Cenozoic Era

The current geological era, beginning 66 million years ago, following the mass extinction of the dinosaurs and characterized by the rise of mammals.