Question

Sandhill Company had cash receipts from customers in 2020 of $117,140. Cash payments for operating expenses were $104,320. Sandhill has determined that at January 1, accounts receivable was $14,620, and prepaid expenses were $20,400. At December 31, accounts receivable was $15,400, and prepaid expenses were $26,610. Compute (a) service revenue and (b) operating expenses.

Answer 1

(a) service revenue = $117,920

(b) operating expenses = $98,110

Step-by-step explanation:

The computations are shown below:

a. For service revenue

= Cash receipts from customers + ending balance account receivable - beginning balance of accounts receivable

= $117,140 + $15,400 - $14,620

= $117,920

b. For operating expenses

= Cash payments for operating expenses + beginning balance of prepaid expense - ending balance of prepaid expense

= $104,320 + $20,400 - $26,610

= $98,110