1. Sarah operates a consulting business. During 2023, she recorded the following transactions:

Transactions (in $)	Amount
Cash Receipts	120,000
Accounts Receivable Collected	25,000
Cash Payments	80,000
Accounts Payable Paid	15,000
Prepaid Expenses	10,000

1. Requirements:
   • Prepare Sarah's income statement for 2023 using the modified cash basis.
   • Calculate the net income, considering only cash receipts and payments.
   • Discuss the treatment of accounts receivable collected and accounts payable paid under the modified cash basis.
   • Analyze the impact of prepaid expenses on cash flow and net income.