Question

Revenue on the income statement was $121,560. Accounts receivable were $3,680 on January 1 and $3,500 on December 31. Unearned revenue was $1,300 on January 1 and $1,520 on December 31.

Calculate the revenue for the year on a cash basis.

Answer 1

To calculate the revenue on a cash basis, we start with the income statement revenue and adjust for changes in accounts receivable and unearned revenue. The cash basis revenue for the year would be $121,960.

Step-by-step explanation:

The task is to calculate the revenue for the year on a cash basis. The given figures are:

Revenue on the income statement - $121,560

Accounts receivable on January 1 - $3,680

Accounts receivable on December 31 - $3,500

Unearned revenue on January 1 - $1,300

Unearned revenue on December 31 - $1,520.

To find the cash basis revenue, we need to adjust the reported income statement revenue by the changes in accounts receivable and unearned revenue. Cash basis revenue excludes revenues that have been recognized but not yet received (accounts receivable), and also excludes revenues received but not yet recognized (unearned revenue).

Our calculation is as follows:
Cash Basis Revenue = Income Statement Revenue + Beginning Accounts Receivable - Ending Accounts Receivable + Ending Unearned Revenue - Beginning Unearned Revenue

So the calculation will be:
Cash Basis Revenue = $121,560 + $3,680 - $3,500 + $1,520 - $1,300

When we do the math:
Cash Basis Revenue = $121,560 + $180 + $220

Finally:
Cash Basis Revenue = $121,960