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?

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Definitions:

Polarity

Separation of charge into distinct positive and negative regions.

Electronegativity

Measure of the ability of an atom to pull electrons away from other atoms.

Hydrophobicity

The physical property of a molecule that is seemingly repelled from a mass of water.

Cohesion

The force that holds molecules of the same substance together, contributing to the tensile strength of water.