Oriole Industries collected $106,000 from customers in 2020. Of the amount collected, $25,600 was for services performed in 2019. In addition, Oriole performed services worth $38,100 in 2020, which will not be collected until 2021. Oriole Industries also paid $71,500 for expenses in 2020. Of the amount paid, $29,900 was for expenses incurred on account in 2019. In addition, Oriole incurred $43,400 of expenses in 2020, which will not be paid until 2021. A. Compute 2020 cash-basis net income.
B. Compute 2020 accrual-basis net income.

A. 2020 cash-basis net income = $34,500

B. 2020 accrual-basis net income = $33,500

Explanation:

A. Compute 2020 cash-basis net income.

Cash-basis net income is computed by deducting the cash paid from cash received in an accounting period, i.e. 2020, as follows:

2020 cash-basis net income = Cash collected in 2020 - Expenses paid in 2020 = $106,000 - $71,500 = $34,500

B. Compute 2020 accrual-basis net income.

Accrual-basis net income is computed by deducting total expenses incured in the period from the total income earned in the period regardless of whether or mot cash is paid or received in period, i.e. 2020, as follows:

2020 accrual-basis net income = Cash collected for services performed in 2020 + Service performed on account in 2020 but to be collected in 2021 - Cash paid for expenses incurred in 2020 - Expenses incurred on account in 2020 but to be paid in 2021

2020 accrual-basis net income = ($106,000 - $25,600) + $38,100 - ($71,500 - $29,900) - $43,400 = $33,500

i think the answer to your question is b. directive