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Problem 4-31 (Algorithmic) (LO. 2, 5) Al is a medical doctor who conducts his practice as a sole proprietor. During 2020, he received cash of
Problem 4-31 (Algorithmic) (LO. 2, 5) Al is a medical doctor who conducts his practice as a sole proprietor. During 2020, he received cash of $345,600 for medical services. Of the amount collected, $34,800 was for services provided in 2019. At the end of 2020, Al had accounts receivable of $96,500, all for services rendered in 2020. In addition, at the end of the year, Al received $8,000 as an advance payment from a health maintenance organization (HMO) for services to be rendered in 2021. a. Compute Al's gross income for 2020 using the cash basis of accounting. b. Compute Al's gross income for 2020 using the accrual basis of accounting. c. Advise Al on which method of accounting he should use. Al should use the of accounting so that he will not have to pay income taxes on the
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