QS 3-2 (Algo) Computing accrual and cash income LO C1 In its first year of operations, Roma Company reports the following. - Earned revenues of $47,000 ( $39,000 cash received from customers). - Incurred expenses of $26,500 (\$20,950 cash paid toward them). - Prepaid $7,250 cash for costs that will not be expensed until next year. Compute Roma's first-year net income under the cash basis and the accrual basis of accounting. QS 3-5 (Algo) Prepaid (deferred) expenses adjustments LO P1 For each separate case below, follow the three-step process for adjusting the prepaid asset account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2 . Assume no other adjusting entries are made during the year. b. Prepald Insuranco. The Prepaid Insurance account has a $7,290 deblt balance at the start of the year. A reviow of insurance policies shows $1,600 of insurance has expired by year-end