Do not type dollar signs. Use commas when appropriate as in 129,000. Sasha is a physician who conducts her business as a sole proprietor. During 2023, she received cash of $280,000 for medical services. Of the amount collected, $40,000 was services provided in 2022. At the end of 2023, Sasha had accounts receivable of $60,000, all for services rendered in 2023. In addition, at the end of the year, Sasha received $12,000 as an advance payment from a health insurance company for services to be provided in 2024. Calculate Sasha's gross income for 2023: a. using the cash basis of accounting b. using the accrual basis of accounting c. Advise Sasha on which method of accounting she should use to pay the least amount of tax.
Do not type dollar signs. Use commas when appropriate as in 129,000. Sasha is a physician who conducts her business as a sole proprietor. During 2023, she received cash of $280,000 for medical services. Of the amount collected, $40,000 was services provided in 2022. At the end of 2023, Sasha had accounts receivable of $60,000, all for services rendered in 2023. In addition, at the end of the year, Sasha received $12,000 as an advance payment from a health insurance company for services to be provided in 2024. Calculate Sasha's gross income for 2023: a. using the cash basis of accounting b. using the accrual basis of accounting c. Advise Sasha on which method of accounting she should use to pay the least amount of tax.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Do not type dollar signs. Use commas when appropriate as in 129,000.
Sasha is a physician who conducts her business as a sole proprietor. During 2023, she received cash of $280,000 for medical services. Of the
amount collected, $40,000 was services provided in 2022. At the end of 2023, Sasha had accounts receivable of $60,000, all for services
rendered in 2023. In addition, at the end of the year, Sasha received $12,000 as an advance payment from a health insurance company for
services to be provided in 2024. Calculate Sasha's gross income for 2023:
a. using the cash basis of accounting
b. using the accrual basis of accounting
c. Advise Sasha on which method of accounting she should use to pay the least amount of tax.
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Step 1: Definition of cash basis and accrual basis of accounting:
VIEWStep 2: Requirement a- Calculation of gross income using cash basis accounting:
VIEWStep 3: Requirement b- Calculation of gross income using accrual basis accounting:
VIEWStep 4: Requirement c- Recommending method to use to pay least amount of tax:
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