(L07) (Cash to Accrual Basis) Jill Accardo, M.D., maintains the accounting records of Accardo Clinic on a cash basis. During 2017, Dr. Accardo collected \(142,000 from her patients and paid \)55,470 in expenses. At January 1, 2017, and December 31, 2017, she had accounts receivable, unearned service revenue, accrued expenses, and prepaid expenses as follows. (All long-lived assets are rented.)

January 1, 2017, December 31,2017

Account receivable \(9,250 \)15,927

Unearned service revenue \(2,840 \)4,111

Accrued expenses \(3,435 \)2,108

Prepaid expenses \(1,917 \)3,232

Instructions:

Prepare a schedule that converts Dr. Accardo’s “excess of cash collected over cash disbursed” for the year 2017 to net income on an accrual basis for the year 2017.

Jill Accardo, M.D.

Conversion of Income Statement Data

Cash

Accrual

Collection from customers:

$ 142,600

$ 142,600

Less: Accounts receivable, Jan 1

$ 9,250

$(9,250)

Add: Accounts receivable, Dec31

$15,927

$15,927

Add: Unearned service revenue, Jan 1

$ 2,840

$2,840

Less: Unearned service revenue Dec31

$ 4,111

$ (4,111)

Service Revenue

$ 142,600

$18,767

$ 13,361

$ 148,006

Disbursement for expenses:

$55,470

$ 55,470

Less: Accrued expense, Jan1

$3,435

$(3,435)

Add: Accrued expenses, Dec31

$ 2,108

$ 2,108

Add: Prepaid expenses, Jan1

$1,917

$ 1,917

Less: Prepaid expenses Dec31

$3,232

$ (3,232)

Operating Expenses

$ 55,470

$ 4,025

$ 6,667

$52,828

Net Income – Cash Basis

$ 87,130

Net Income- Accrual Basis

$ 95,178

Cash receipts from customers

$ 142,600

Less: Beginning accounts receivable

$ (9,250)

Add: Ending accounts receivable

$ 15,927

Add: Beginning Unearned revenue

$ 2,840

Less: Ending Unearned revenue

$ (4,111)

Revenue on the Accrual basis

$ 148,006

Cash paid to operating expenses

$ 55,470

Less: Beginning accrual expenses

$ (3,435)

Add: Ending accrual expenses

$ 2,108

Add: Beginning prepaid expenses

$ 1,917

Less: Ending Prepaid Expenses

$ (3,232)

Expenses on the Accrual Basis

$ 52,828