Peter started a business, as a sole proprietor, in January 2020 providing a variety of services to his clients.

In the year to 31 December 2020 he

• collected $45,000 from his clients
• and paid out $50,100 in expenses.

The breakdown of the expenses was as follows:

Salaries	$24,000
Insurance	$4,000
Car expenses	$2,400
Rent	$18,600
Other	$1,100

Based on the figures above he is discouraged and thinks he should try to find a job rather than continue his business, which consumes so much of his time.

In discussions with Peter in February 2021 you discover that

• One client paid him a retainer in September 2020 of $4,000. This is for a years worth of services which started on 1 October 2020.
• Three clients owed him for services that he and his employee performed in 2020 the total amount owed was $25,300.
• He pays his employee every two weeks and the last payday before the year-end was on December 24which was a Friday. The employees salary for each 2-week period is $1,000.
• He left his car in the auto-repair shop in late December but when he went to pick it up, it was already closed for the Christmas/New Year break so he didnt get to pay the bill until January 2021 this was $235.
• He started to rent premises on 1 April 2020 and had to pay one years rent up front on that date to his landlord.

Required:

Based on this information, how much was Peters 2020 net income or net loss on a cash basis and on an accruals basis?

Additional information

In the following year (2021) Peter

• received cash of $123,000 from his clients, was owed $41,000 at the end of the year from clients and did not have any clients who had paid him a retainer
• paid $3,640 in cash to the auto-repair shop (for repairs, fuel etc.) and did not owe them any money at the year end
• paid $7,200 in rent for the year to 31 March 2022

Required:

Based on the latter pieces of information, what would his service income, motor expenses and rent be for 2021 under the accruals basis?