Carmen opens a retail store. Her sales durning the first year are $600,000, of which $30,000 has not been collected at year-end. Her purchases are $400,000. She still owes $20,000 to her suppliers, and at the year-end she has $50,000 of inventory on hand. She incurred operating expenses of $160,000. At year-end she has not paid $15,000 of her expenses.

a) Compute her net income from the business assuming she elects the accrual method.

b) Compute her net income from the business assuming she elects the cash method.

c) Would paying the $15,000 she owes for operating expenses before year-end change her net income under accrual

method of reporting? under cash method?