Mello, Inc, sells home-spa equipment to customers. Its fiscal year ends this mon
ID: 2574857 • Letter: M
Question
Mello, Inc, sells home-spa equipment to customers. Its fiscal year ends this month. The following transactions occurmed this year . Purchased $77,000 of new home-spa massage equipment inventory; paid $20,000 in cash and owed the rest on account Paid employees $25.500 in wages for work during the year, an addtional $3,150 for ourrent year wages will be paid at the end of the first week of next month - Sold massage equipment to customers for $64,000, received $26,000 in cash and the rost on account. The cost of the equipment was $34,000 Paid $21 cash for ublibies for this year. $1,350 in uility bills for this year remain unpaid. .Received $1,718 from customers as deposits on orders of new home-spa equipment to be delivered to the customers next year. Using the cash basis of accounting, what would Mello, Inc report as current year income?Explanation / Answer
Revenue Cash Sales $26,000 Customer Deposits $1,718 Less: Expenses Inventory Purchases -$20,000 Wages Paid -$25,500 Utilities Paid -$21 Net Income (cash basis accounting) -$17,803