Calculate income using the cash basis method of accounting

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Susan is a lawyer who operates her business as a sole proprietorship. During 2014 she receives $300,000 for her legal services. Of the amount collected, $50,000 was for services provided in 2013. At the end of 2014 her A/R balance was $75,000, which represented amounts due for services rendered in 2014. In addition, Susan received a retainer payment of $10,000 at the end of 2014 for services to be rendered in 2015.

a. Calculate Susan’s income using the cash basis method of accounting

b. Calculate Susan’s income using the accrual basis of accounting

Reference no: EM13863473

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