Compute al gross income

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Question - Al is a medical doctor who conducts his practice as a sole proprietor. During 2021, he received cash of $425,400 for medical services. Of the amount collected, $45,600 was for services provided in 2020. At the end of 2021, Al had accounts receivable of $99,900, all for services rendered in 2021. In addition, at the end of the year, Al received $18,000 as an advance payment from a health maintenance organization (HMO) for services to be rendered in 2022.

a. Compute Al's gross income for 2021 using the cash basis of accounting.

b. Compute Al's gross income for 2021 using the accrual basis of accounting.

c. Advise Al on which method of accounting he should use.

Reference no: EM133185168

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