In its first year of operations, Roma Company reports the following. Earned revenues of $48,000 ($40,000 cash received from customers). Incurred expenses of $27,000 ($21,300 cash paid toward them). Prepaid $7,500 cash for costs that will not be expensed until next year.

Compute the companys first-year net income under both the cash basis and the accrual basis of accounting.