Question

Michelle Walker, M.D., maintains the accounting records of Walker Clinic on a cash basis. During 2020, Dr. Walker collected $152,353 from her patients and paid $52,375 in expenses. At January 1, 2020, and December 31, 2020, she had accounts receivable, unearned service revenue, accrued expenses, and prepaid expenses as follows. (All long-lived assets are rented.) January 1, 2020 December 31, 2020 Accounts receivable $8,595 $16,162 Unearned service revenue 3,068 4,456 Accrued expenses 3,320 2,049 Prepaid expenses 2,035 3,078 Prepare a schedule that converts Dr. Walker's "excess of cash collected over cash disbursed" for the year 2020 to net income on an accrual basis for the year 2020. MICHELLE WALKER, M.D. Conversion of Cash Basis to Accrual Basis For the Year 2020

Answer 1

Answer:

MICHELLE WALKER,M.D.
Conversion of cash basis to accrual basis
For the Year 2020		Calculations
Excess of cash collected over cash disbursed	$99,978	[152,353-52,375]
Add: Increase in accounts receivable	$7,567	[16,162-8,595]
(Less): Increase in unearned service revenue	($1,388)	[4,456-3,068]
(Less): Decrease in accrued expenses	($1,271)	[3,320-2,049]
(Less): Increase in prepaid expenses	($1,043)	[3,078-2,035]
Net income on an accrual basis	$103,843

Answer 2

CORRECTIONS (Underlined):

 

Excess of cash collected over cash disbursed	$99,978	[152,353-52,375]
Add: Increase in accounts receivable	$7,567	[16,162-8,595]
(Less): Increase in unearned service revenue	($1,388)	[4,456-3,068]
Add: Decrease in accrued expenses	$1,271	[3,320-2,049]
Add: Increase in prepaid expenses	$1,043	[3,078-2,035]
Net income on an accrual basis	$108,471