Headland Corp. maintains its financial records on the cash basis of accounting. Interested in securing a long-term loan from its regular bank, Headland Corp. requests you as its independent CPA to convert its cash-basis income statement data to the accrual basis. You are provided with the following summarized data covering 2016, 2017, and 2018.

Using the data provided, I'm trying to convert these charges from the cash basis to the accrual basis.

I solved the first half of the problem (Calculating net income/loss for 2016 & 2017 using the cash basis)

2016 2017

Sales Revenue 304,180 530,500

Expenses 239,940 278,230

Net Income/Loss 64,240 252,270

The formula I have to convert cash basis to accrual basis is

Revenues:

Cash receipts - Beginning A/R + Ending A/R = Accrued Revenue

Expenses:

Cash paid for operating expenses + Begining Prepaid Expenses - Ending Prepaid Expenses

2016 2017

Sales Revenue 498,320 452,920

Expenses x x

Net Income/Loss ? ?

I need to solve for the expenses on an accrual basis so I can find the net income.

I'm sure if this is the solution, I've got the problem wrong several times and would like to get it right if I can.

2016 Cash Receipts + Prepaid Expenses in 2016 - Paid Expenses in 2016

(304180+165290+28852)+38310 - (201630 + 66400 +24530)

2017 Cash Receipts + Prepaid Expenses in 2017 - Paid Expenses in 2017

(365210+87710) + 3810 + 164520+ 55920) - 47310