Conan Industries collected $100,000 from customers in 2011. Of the amount collected, $25,000 was from revenue earned on account in 2010. In addition, Conan earned $40,000 of revenue in 2011, which will not be collected until 2012. Conan Industries also paid $70,000 for expenses in 2011. Of the amount paid, $30,000 was for expenses incurred on account in 2010. In addition, Conan incurred $42,000 of expenses in 2011, which will not be paid until 2012.
(a) Compute 2011 cash-basis net income.
(b) Compute 2011 accrual-basis net income.