Exercise 3-03

Novak Industries collected $106,000 from customers in 2020. Of the amount collected, $25,600 was for services performed in 2019. In addition, Novak performed services worth $40,700 in 2020, which will not be collected until 2021. Novak Industries also paid $73,700 for expenses in 2020. Of the amount paid, $30,900 was for expenses incurred on account in 2019. In addition, Novak incurred $42,000 of expenses in 2020, which will not be paid until 2021. (a) Compute 2020 cash-basis net income.

Cash-basis net income

$

(b) Compute 2020 accrual-basis net income.

Accrual-basis net income

$

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