Reporting Income: Cash versus Accrual Accounting On December 31, 2009, Matt Morgan completed the first year of operations for his new computer retail store. The following data were obtained from the company’s accounting records:

1. How much net income (loss) should Matt report for the year ended December 31, 2009, according to

(a) cash-basis accounting and

(b) accrual-basis accounting?
2. Which basis of accounting provides the better measure of operating results for Matt?

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Sales to customers Collections from customers Interest earned and received on savings accounts Cost of goods sold Amounts paid to suppliers for inventory Wages owed to employees at year-end $197,000 145,000 2,500 98,500 103,000 3,500 Wages paid to employees .... 40,000 Utility bill owed: to be paid next month 1,100 Interest due at 12/31 on loan to be paid in March of next year 1,200 Amount paid for one and one-half years' rent, beginning Jan. 1, 2009 Income taxes owed at year-end 17,500 4,000