Exercise 3-3

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Primo Industries collected $104,186from customers in 2014. Of the amount collected, $25,171was from services performed in 2013. In addition, Primo performed services worth $38,217 in 2014, which will not be collected until 2015.

Primo Industries also paid $72,661for expenses in 2014. Of the amount paid, $30,711was for expenses incurred on account in 2013. In addition, Primo incurred $41,773of expenses in 2014, which will not be paid until 2015.

(a)Compute 2014 cash-basis net income.

Cash-basis net income

$

(b)Compute 2014 accrual-basis net income.

Accrual-basis net income

$