Problem 1

E Company has the following balances for 2020:

Cash basis income 4,404,000
(revenue of 7,640,000 less expense of 3,236,000)
Accrued revenue, December 31, 2019 364,000
Accrued revenue, December 31, 2020 292,000
Unearned revenue, December 31, 2019 264,000
Unearned revenue, December 31, 2020 432,000

Accrued expenses, December 31, 2019 196,000

Accrued expenses, December 31, 2020 260,000
Prepaid expenses, December 31, 2019 184,000
Prepaid expenses, December 31, 2020 224,000

Compute for the accrual basis net income for 2020.

Problem 2
M Company reported the following balances at the end of each year:
Inventory, Dec. 31, 2019 725,000
Inventory, Dec. 31, 2020 650,000
Accounts Payable, Dec. 31, 2019 125,000
Accounts Payable, Dec. 31, 2020 187,500

The entity paid the suppliers 1,225,000 during the year ended December 31, 2020. What amount should be reported for
cost of goods sold in 2020?

Problem 3
J Company has the following details for 2020:
Accounts Receivable, January 1, 2020 400,000
Allowance for Doubtful Accounts, January 1, 2020 32,000
Accounts Receivable, December 31, 2020 672,000
Accounts Written Off 48,000
Cash Sales 200,000
Sales on Account 1,200,000
Doubtful Accounts Expense 80,000

Under cash basis, what amount should be reported as sales?

Problem 4
Z Company reported the following amounts in 2020:
Sales revenue 1,150,000
Accounts written off 5,000
Accounts receivable, December 31, 2019 250,000
Allowance for doubtful accounts, December 31, 2019 15,000
Accounts receivable, December 31, 2020 325,000
Allowance for doubtful accounts, December 31, 2020 27,500

Compute for the cash basis sales for 2020.

Problem 5
S Company provided the following information for the current year:
Interest paid 800,000
Decrease in prepaid interest 100,000
Increase in accrued interest payable 30,000

What is the interest expense that should be reported for the current year?
Problem 6
For each of the following independent items, make the required calculations:

Prepaid insurance, end of period 13,480

Insurance expense for the period 38,900
Insurance premiums paid during the period 48,200

a. Prepaid insurance, beginning of period

Cash, beginning of the period 700,000

Cash, end of the period 980,000
Total cash disbursed during the period 1,160,000
Accounts receivable, beginning of the period 1,200,000
Accounts receivable, end of the period 1,660,000
Accounts written off during the period 30,000

b. Sales revenue

Equipment (net), beginning of the year 210,000

Cost of the equipment acquired during the year 80,000
Equipment (net), end of the year 206,000

Equipment with an original cost of 60,000 was sold at a loss of 4,000 during the period for 36,000

c. Depreciation expense

Rent collected in advance, beginning of the year 80,000

Rent collected in advance, end of the year 100,000
Rent revenue, beginning of the year 54,000
Rent revenue, end of the year 30,000
Rent earned during the period 440,000

d. Collections of rent