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Accounting Methods (LO 7.2) Yolanda is a cash basis taxpayer with the following transactions during the year: Cash received from sale of products $66,000 Cash paid for expenses (except rent and interest) 40,000 Rent paid on a leased building for 18 months beginning December 1 45,000 Prepaid interest on a bank loan, paid on December 31 for the next 3 months 5,000 Calculate Yolanda's income from her business for this calendar year. If an amount is zero, enter "0". Sales income $ 66,000Expenses: Other than rent and interest $ 40,000Rent $__________ Interest $ ______Net income $_______

Respuesta :

Answer:

$23,500

Explanation:

The computation of the net income is shown below:

Sales income $66,000

Less:

Cash paid other than rent and interest -$40,000

Rent paid ($45,000 × 1 months ÷ 18 months) -$2,500

Prepaid interest $0

Net income   $23,500

As the yolanda is a cash tax basis taxpayer so only that revenues and expenses are considered which are earned and incurred for the same particular period

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