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The Barden Company Provides the Following Information from Its Year

question 48

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The Barden Company provides the following information from its Year 3 and Year 4 balance sheets:
 Year 3 Year 4 Accounts receivable $115,000$97,500 Inventory 120,000130,000 Prepaid insurance 7,5001,500 Prepaid rent 40,00015,000 Accounts payable 55,00065,000\begin{array}{lrr}&\text { Year } 3&\text { Year } 4\\\text { Accounts receivable } & \$ 115,000 & \$ 97,500 \\\text { Inventory } & 120,000 & 130,000 \\\text { Prepaid insurance } & 7,500 & 1,500 \\\text { Prepaid rent } & 40,000 & 15,000 \\\text { Accounts payable } & 55,000 & 65,000\end{array}
The following information is available from the Year 4 income statement:
 Sales $425,000 Cost of goods sold 225,000 Insurance expense 12,000 Rent expense 25,000\begin{array} {| l r | } \hline \text { Sales } & \$ 425,000 \\\text { Cost of goods sold } & 225,000 \\\text { Insurance expense } & 12,000 \\\text { Rent expense } & 25,000\\\hline\end{array}
-Assuming that the information provided from the income statement represents all of the pre-tax income of Barden Company,what is the difference between the accrual-basis and cash-basis income in Year 4?


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