1. Consider the amount and timing of the following transactions made by I.M. Farmer.

a.November 2018 Purchased, paid for and applied fertilizer for the 2019 grain crop. $38,000.

b. March 2019 Purchased and paid for seed, chemicals, fuel, other variable costs. $65,000.

c. October 2019 Purchased and charged to account fuel for drying. $4,000.

d. November 2019 Part of grain sold for $72,000. Rest placed in storage, valued at $70,000.

e. December 31, 2019 Accrued interest totals $1,200.

f. January 2020 Paid bill for fuel used to dry grain. $4,000.

g. January 2020 Paid accrued interest, $1,200.

h. May 2020 Remaining 2014 grain sold. $65,000.

A) What is the 2019 profit under cash accounting? (Show work)

B) What is the 2019 profit under accrual accounting? (Show work.)

C) Which system is the most accurate reflection of actual farm profit? Why?