In its first year of operations, Carla Vista Company recognized $29,800 in service revenue, $7,800 of which was on account and still outstanding at year-end. The remaining $22,000 was received in cash from customers. The company incurred operating expenses of $18,300. Of these expenses, $13,700 were paid in cash; $4,600 was still owed on account at year-end. In addition, Carla Vista prepaid $3,260 for insurance coverage that would not be used until the second year of operations. (a) Calculate the first year's net earnings under the cash basis of accounting, and calculate the first year's net earnings under the accrual basis of accounting. Net Income $ Cash Basis $ Accrual Basis

In its first year of operations, Carla Vista Company recognized $29,800 in service revenue, $7,800 of which was on account and still outstanding at year-end. The remaining $22,000 was received in cash from customers. The company incurred operating expenses of $18,300. Of these expenses, $13,700 were paid in cash; $4,600 was still owed on account at year-end. In addition, Carla Vista prepaid $3,260 for insurance coverage that would not be used until the second year of operations. (a) Calculate the first year's net earnings under the cash basis of accounting, and calculate the first year's net earnings under the accrual basis of accounting