Answer:
$7,950
Step-by-step explanation:
Under the cash basis of accounting, revenue and expenses are only recognized when cash has been received and paid respectively.
As such, there are no accrual as expected in the accrual system of accounting. No cash collection, no revenue recognition, no cash payment, no expense recognition.
Revenue recognized would include cash and credit sales.
Cash sales = $19,000 - $3,000
= $16,000
Expense recognized includes cash expenses and credit expenses
cash expense = $7,250 - $750
= $6,250
Total expense will also include supplies purchased using cash
Total expense = $6,250 + $1,800
= $8,050
net income is the difference between the sales and expenses.
net income = $16,000 - $8,050
= $7,950