Francis Mayberry, M.D., maintains the accounting records of Mayberry Clinic on a cash basis. During 2020, Dr. Mayberry collected $134,269 from her patients and paid $50,926 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, 2020Accounts receivable $8,768 $14,914Unearned service revenue 2,908 3,733Accrued expenses 3,444 2,049Prepaid expenses 1,835 3,239Prepare a schedule that converts Dr. Mayberry’s "excess of cash collected over cash disbursed" for the year 2020 to net income on an accrual basis for the year 2020.

Question
Asked Jan 27, 2020
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Francis Mayberry, M.D., maintains the accounting records of Mayberry Clinic on a cash basis. During 2020, Dr. Mayberry collected $134,269 from her patients and paid $50,926 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
  $8,768   $14,914
Unearned service revenue
  2,908   3,733
Accrued expenses
  3,444   2,049
Prepaid expenses
  1,835   3,239


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

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Expert Answer

Step 1

Meaning of Accrual basis:

Accrual basis refers to the recording of accounting transaction. Under the accrual basis, transaction is recorded when rev...

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