Cash conversion to accrual
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Your examination of a company's records that follows the cash basis of accounting reveals that the company's reported cash basis earnings in 2006 are $ 33,640. If the firm had followed accrual basis accounting practices, it would have reported the following year end balances.
2006 2005
ACCOUNTS RECEIVABLE $ 3400. $ 2300.
SUPPLIES ON HAND 1300 1160
UNPAID WAGES 1500 2400
OTHER UNPAID AMOUNTS 1400 1600
Determine the company's net earnings on an accrual basis for 2006. Show calculations.
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Solution Summary
The problem discusses the process necessary to make the conversion from cash to accrual net income for 2006.
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