Corinne Dunbar, M.D., maintains the accounting records of Dunbar Clinic on a cas
ID: 2350633 • Letter: C
Question
Corinne Dunbar, M.D., maintains the accounting records of Dunbar Clinic on a cash basis. During 2012, Dr. Dunbar collected $144,600 from her patients and paid $61,310 in expenses. At January 1, 2012, and December 31, 2012, she had accounts receivable, unearned service revenue, accrued expenses, and prepaid expenses as follows. (All long-lived assets are rented.)January 1, 2012
December 31, 2012
Accounts receivable $12,291 $15,937
Unearned service revenue 2,989 4,203
Accrued expenses 3,533 2,386
Prepaid expenses 1,939 3,268
Compute net income on an accrual basis for the year 2012 starting with excess of cash collected over cash disbursed for the year 2012.
Net income on an accrual basis
$
Explanation / Answer
Under the accrual method, you record business income when a sale occurs, whether it be the delivery of a product or the rendering of a service on your part, regardless of when you get paid. You record an expense when you receive goods or services, even though you may not pay for them until later. so here net income= net revenue - net expense Net accural revenue = 144600 + (4203-2989) = 145814 Expense = 61310 -(3268-1939) = 59981 net profit = 85833