Erin is considering switching her business from the cash method to the accrual method at the beginning of next year (year 1). Determine the amount and timing of her 481 adjustment assuming the IRS grants Erin's request in the following alternative scenarios.

a. At the end of year 0/beginning of year 1, Erin's business has $20,900 of accounts receivable and $26,600 of accounts payable that have not been recorded for tax purposes.

b. At the end of year 0/beginning of year 1, Erin's business reports $37,200 of accounts receivable and $15,800 of accounts payable that have not been recorded for tax purposes.

Erin's 481 Adjustment
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Number of year(s)