Carillo Painting collected £108,000 from customers in 2020. Of the amount collected, £25,000 was for services performed in 2019. In addition, Carillo performed services worth £36,000 in 2020, which will not be collected until 2021.

Carillo Painting also paid £72,000 for expenses in 2020. Of the amount paid, £30,000 was for expenses incurred on account in 2019. In addition, Carillo incurred £42,000 of expenses in 2020, which will not be paid until 2021.

Instructions

a. Compute 2020 cash-basis net income.

b. Compute 2020 accrual-basis net income.