1. Sarah runs a freelance graphic design business. Here are the financial transactions for 2023:

Transactions (in $)	Amount
Cash Receipts	60,000
Accounts Receivable Collected	12,000
Cash Payments	40,000
Accounts Payable Paid	8,000
Office Rent	10,000

1. Requirements:
   • Prepare Sarah's income statement for 2023 using the modified cash basis.
   • Calculate the net income, considering cash receipts, payments, and collections from accounts receivable.
   • Discuss how office rent and payments to accounts payable are treated under the modified cash basis.
   • Analyze the impact of including accounts receivable collected on financial reporting.
   • Recommend strategies to manage cash flow effectively based on the modified cash basis.