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In its first year of operations, Pharoah Company recognized $31,800 in service revenue, $6.400 of which was on account and still outstanding at year-end. The
In its first year of operations, Pharoah Company recognized $31,800 in service revenue, $6.400 of which was on account and still outstanding at year-end. The remaining $25,400 was received in cash from customers. The company incurred operating expenses of $16,600. Of these expenses, $12.730 were paid in cash; $3,870 was still owed on account at year-end. In addition, Pharoah prepaid $2.390 for insurance coverage that would not be used until the second year of operations. X Your answer is incorrect. Calculate the first year's net earnings under the cash basis of accounting, and the first year's net earnings under the accrual basis of accounting. Cash Basis Net Income $ Accrual Basis 12670 $ 12810
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