All,

Please review the problem and answer below and discuss:

Accrual basis.

Sales salaries paid during 2014 were $85,000. Advances to salesmen were $1,100 on January 1, 2014, and $800 on December 31, 2014. Sales salaries accrued were $1,360 on January 1, 2014, and $1,880 on December 31, 2014. Show the computation of sales salaries on an accrual basis for 2014.

Answer - $85,000 + $1,100 - $800 - $1,360 + $1,880 = $85,820.