In its first year of operations, Crane Company recognized $$31,700$ in service revenue, $$7,700$ of which was on account and still outstanding at year$-$end. The remaining $$24,000$ was received in cash from customers.

The company incurred operating expenses of $$16,600.$ Of these expenses, $$12,690$ were paid in cash; $$3,910$ was still owed on account at year$-$end. In addition, Crane prepaid $$3,260$ for insurance coverage that would not be used until the second year of operations.

Your answer is incorrect.

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.

Cash Basis

Accrual Basis

Net Income

$

$

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