In its first year of operations, Bere Company earned $27,046 in service revenue, $6,667 of which was on account and still outstanding at year-end. The remaining $20,379 was received in cash from customers.
The company incurred operating expenses of $14,655. Of these expenses $12,264 were paid in cash; $2,391 was still owed on account at year-end. In addition, Bere prepaid $3,645 for insurance coverage that would not be used until the second year of operations.
Calculate the first year's net earnings under the cash basis of accounting
I got $8115 plz check if i got it right.
To calculate the first year's net earnings under the cash basis of accounting, we need to consider the revenues and expenses that have been received or paid in cash during the year.
First, let's calculate the total revenue received in cash. The company received $20,379 in cash from customers.
Next, let's calculate the total operating expenses paid in cash. The company paid $12,264 in cash for operating expenses.
To find the net earnings, we need to subtract the total operating expenses paid in cash from the total revenue received in cash:
Net earnings = Total revenue received in cash - Total operating expenses paid in cash
Net earnings = $20,379 - $12,264
Net earnings = $8,115
So, according to the information provided, the first year's net earnings under the cash basis of accounting is $8,115. Therefore, you got it right.