Question

Helen Martin, M.D., maintains the accounting records of Martin Clinic on a cash basis. During 2020, Dr. Martin collected $141,986 from her patients and paid $51,749 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		$9,012		$15,880
Unearned service revenue		2,940		4,440
Accrued expenses		3,247		2,113
Prepaid expenses		1,978		3,353

Prepare a schedule that converts Dr. Martin’s "excess of cash collected over cash disbursed" for the year 2020 to net income on an accrual basis for the year 2020.

HELEN MARTIN, M.D. Conversion of Cash Basis to Accrual Basis For the Year 2020
select an item                                                          Increase in unearned service revenueIncrease in accounts receivableDecrease in accrued expensesIncrease in prepaid expensesDecrease in unearned service revenueDecrease in prepaid expensesDecrease in accounts receivableNet income on an accrual basisExcess of cash collected over cash disbursedIncrease in accrued expenses		$enter a dollar amount
select between addition and deduction                                                          AddLess: select an item                                                          Decrease in prepaid expensesExcess of cash collected over cash disbursedIncrease in unearned service revenueDecrease in unearned service revenueIncrease in prepaid expensesDecrease in accrued expensesDecrease in accounts receivableIncrease in accrued expensesIncrease in accounts receivableNet income on an accrual basis		enter a dollar amount
select between addition and deduction                                                          AddLess: select an item                                                          Decrease in unearned service revenueDecrease in accounts receivableIncrease in accounts receivableIncrease in unearned service revenueExcess of cash collected over cash disbursedDecrease in accrued expensesNet income on an accrual basisIncrease in accrued expensesIncrease in prepaid expensesDecrease in prepaid expenses		enter a dollar amount
select between addition and deduction                                                          AddLess: select an item                                                          Excess of cash collected over cash disbursedDecrease in accounts receivableNet income on an accrual basisDecrease in prepaid expensesIncrease in prepaid expensesDecrease in unearned service revenueIncrease in unearned service revenueIncrease in accounts receivableIncrease in accrued expensesDecrease in accrued expenses		enter a dollar amount
select between addition and deduction                                                          AddLess: select an item                                                          Increase in unearned service revenueDecrease in unearned service revenueExcess of cash collected over cash disbursedDecrease in accrued expensesIncrease in accounts receivableIncrease in accrued expensesNet income on an accrual basisDecrease in accounts receivableDecrease in prepaid expensesIncrease in prepaid expenses		enter a dollar amount
select an item                                                          Decrease in prepaid expensesIncrease in unearned service revenueDecrease in accrued expensesExcess of cash collected over cash disbursedIncrease in accounts receivableNet income on an accrual basisIncrease in accrued expensesDecrease in accounts receivableDecrease in unearned service revenueIncrease in prepaid expenses		$enter a dollar amount

Answer 1

HELEN MARTIN, M.D.
Conversion of Cash Basis to Accrual Basis
For the Year 2020
Excess of cash collected over cash disbursed ($141,986 - $51,749)	$90,237
Add: Increase in accounts receivable ($15,880 - $9,012)	$6,868
Less: Increase in unearned service revenue ($4,440 - $2,940)	($1,500)
Add: Decrease in accrued expenses ($3,247 - $2,113)	$1,134
Add: Increase in prepaid expenses ($3,353 - $1,978)	$1,375
Net Income as per Accrual Basic of Accounting	$98,114