Ivanhoe Industries collected $104,000 from customers in 2020. Of the amount collected, $24,800 was for services performed in 2019. In addition, Ivanhoe performed services worth $41,600 in 2020, which will not be collected until 2021. Ivanhoe Industries also paid $72,200 for expenses in 2020. Of the amount paid, $30,200 was for expenses incurred on account in 2019. In addition, Ivanhoe incurred $40,800 of expenses in 2020, which will not be paid until 2021.

Accrual-basis net income in 2020 = $38,000

Explanation:

Note: This question is not complete as its requirement is omitted. The complete question is therefore provided before answering the question as follows:

Ivanhoe Industries collected $104,000 from customers in 2020. Of the amount collected, $24,800 was for services performed in 2019. In addition, Ivanhoe performed services worth $41,600 in 2020, which will not be collected until 2021. Ivanhoe Industries also paid $72,200 for expenses in 2020. Of the amount paid, $30,200 was for expenses incurred on account in 2019. In addition, Ivanhoe incurred $40,800 of expenses in 2020, which will not be paid until 2021. Compute 2020 accrual-basis net income.

The explanation of the answer is now provided as follows:

In accounting, accrual basis states that revenues should be recorded when they are earned and expenses should be recorded when they are incurred.

Based on this, the 2020 accrual-basis net income of Ivanhoe Industries can be computed as follows:

Total revenue in 2020 = (Amount collected in 2020 - Amount for Services performed in 2019) + Worth of services performed in 2020 but to be collected in 2021 = ($104,000 - $24,800) + $41,600 = $120,800

Total expenses in 2020 = (Amount paid for expenses in 2020 - Amount of expenses incurred in 2019) + (Amount of expenses incurred in 2020 but to be paid in 2021) = ($72,200 - $30,200) + $40,800 = $82,800

Accrual-basis net income in 2020 = Total revenue in 2020 - Total expenses in 2020 = $120,800 - $82,800 = $38,000

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