Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 4, Problem 32P
a.
To determine
Determine Person
b.
To determine
Determine Person AI’s gross income for 2019, using the accrual basis accounting.
c.
To determine
Suggest Person AI concerning the method of accounting which would provide benefit for him.
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Al is a medical doctor who conducts
his practice as a sole proprietor. During
2022, he received cash of $357,000 for
medical services. Of the amount
collected, $40,800 was for services
provided in 2021. At the end of 2022,
Al had accounts receivable of $99,900,
all for services rendered in 2022. In
addition, at the end of the year, Al
received $9,500 as an advance
payment from a health maintenance
organization (HMO) for services to be
rendered in 2023.
Question Content Area
a. Compute Al's gross income for 2022
using the cash basis of accounting.
b. Compute Al's gross income for 2022
using the accrual basis of accounting.
Al is a medical doctor who conducts his practice as a sole proprietor. During 2023, he received cash of $490,000 for medical
services. Of the amount collected, $33,600 was for services provided in 2022. At the end of 2023, Al had accounts receivable
of $94,800, all for services rendered in 2023. In addition, at the end of the year, Al received $9,500 as an advance payment
from a health maintenance organization (HMO) for services to be rendered in 2024.
a. Compute Al's gross income for 2023 using the cash basis of accounting.
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b. Compute Al's gross income for 2023 using the accrual basis of accounting.
Planning
Al is a medical doctor who conducts his practice as a sole proprietor. During 2023, he received cash of
$280,000 for medical services. Of the amount collected, $40,000 was for services provided in 2022. At the end
of 2023, Al had accounts receivable of $60,000, all for services rendered in 2023. In addition, at the end of the
year, Al received $12,000 as an advance payment from a health maintenance organization (HMO) for
services to be rendered in 2024. Compute Al's gross income for 2023: (LO.2,, 5)
a. Using the cash basis of accounting.
b. Using the accrual basis of accounting.
c. Advise Al on which method of accounting he should use.
Chapter 4 Solutions
Individual Income Taxes
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