ABC Ad Agency provides marketing solutions. Financial transactions for 2023 are as follows:

Transactions (in $ millions)	Amount
Cash Receipts	45.0
Accounts Receivable Collected	7.5
Cash Payments	30.0
Accounts Payable Paid	5.0
Operating Expenses	12.5

Requirements:

• Prepare ABC Ad Agency's income statement for 2023 using the modified cash basis.
• Calculate the net income, considering cash receipts, payments, and collections from accounts receivable.
• Discuss the treatment of operating expenses and payments to accounts payable under the modified cash basis.
• Analyze the impact of including accounts receivable collected on financial reporting.