In its first year of operations, Cynthia Corp. earned $56,800 in service revenue. Of that amount, $9,200 was on account and the remainder, $47,600, was collected in cash from customers. The company incurred various expenses totalling $33,400, of which $28,700 was paid in cash. At year end, $4,700 was still owing on account. In addition, Cynthia prepaid $3,200 for insurance coverage for the last half of the first year and the first half of the second year. Cynthia expects to owe $4,200 of income tax when it files its corporate income tax return after year end. (a) Calculate the first year's net income under the accrual basis of accounting. Net income under accrual basis Bill's Barber Shop signed a one-year, 7% bank loan payable in the amount of $5,000 on April 1. Interest is due at maturity. The relevant adjusting entry on December 31 , assuming adjusting entries are only made at December 31 , would consist of a debit to Interest Expense for $262.50 and a credit to Interest Payable for $262.50. a debit to Bank Loan Payable for $262.50 and a credit to Interest Payable for $262.50. a debit to Interest Expense for $350 and a credit to Interest Payable for $350. a debit to Interest Expense for $87.50 and a credit to Bank Loan Payable for $87.50. At December 31, 2024, before any year-end adjustments, Monty Corp.'s Insurance Expense account had a balance of $910 and its Prepaid Insurance account had a balance of $3620. It was determined that $1800 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be $2125. $1800. $2710. $910