In: Accounting
Grier & Associates maintains its records on the accrual basis. You have been engaged to convert its income statement to the cash basis. The accrual basis income statement, along with additional information, follows:
Grier & Associates
Income Statement (Accrual Basis)
For the Year Ended December 31, 2020
Sales Revenue $425,000
Expenses:
Salaries and wages $170,000
Income taxes 65,000
Insurance 40,000
Depreciation 15,000
Interest 25,000 315,000
Net income $110,000
Additional information:
Balances at 12/31
2020 2019
Accounts receivable $50,000 $30,000
Salaries and wages payable 10,000 20,000
Income taxes payable 24,000 19,000
Prepaid insurance 8,000 4,000
Accumulated depreciation 95,000 80,000
Interest payable 3,000 9,000
No plant assets were sold during 2020.
What is cash basis net income? $__________
Cash flow from Operating Activities | |||
Net Income | $ 1,10,000 | ||
Adjustments | |||
Depreciation | $ 15,000 | ||
Increase in Accounts Receivable | $ -20,000 | ||
Increase in Prepaid Insurance | $ -4,000 | ||
Decrease in Salaries and Wages Payable | $ -10,000 | ||
Decrease in Interest payable | $ -6,000 | ||
Increase in Income Tax Payable | $ 5,000 | ||
Total Adjustments | $ -20,000 | ||
Net Cash from operating activities | $ 90,000 |
Cash basis net income = $90000