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HELPPPPPP PLEASEEEE! In its first year of operations, Wildhorse Company recognized $36,400 in service revenue,...

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Accounting

HELPPPPPP PLEASEEEE! In its first year of operations, Wildhorse Company recognized $36,400 in service revenue, $7,800 of which was on account and still
outstanding at year-end. The remaining $28,600 was received in cash from customers.
The company incurred operating expenses of $20,540. Of these expenses, $15,600 were paid in cash; $4,940 was still owed on
account at year-end. In addition, Wildhorse prepaid $3,120 for insurance coverage that would not be used until the second year of
operations.
(a) Calculate the first year's net earnings under the cash basis of accounting, and calculate the first year's net earnings under the
accrual basis of accounting.
(b) Which basis of accounting (cash or accrual) provides more useful information for decision-makers?
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