Cash versus accrual accounting
Response to the following problem:
Haskins and Jones, Attorneys-at-Law, maintain its books on a cash basis. During 2016, the company collected $545,000 in fees from its clients and paid out $412,000 in expenses. You are able to determine the following information about accounts receivable, prepaid expenses, deferred fee revenue, and accrued liabilities:
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January 1, 2016
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Doceniber 31, 2016
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Accounts receivable
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$62,000
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$55,000
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Prepaid insurance
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4.500
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6,000
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Prepaid rent
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9,200
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8,200
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Deferred fee revenue
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9,200
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11,000
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Accrued liabilities
(for various expenses)
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12,200
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15,600
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In addition, 2016 depreciation expense on furniture and fixtures is $22,000.
Required:
Determine accrual basis net income for 2016.