Tutorial Problem Set 1
Problem 1
In its accrual-basis income statement for the year ended December 31, 2020, Bangau-Bangau
Berhad reported revenue of RM3,565,000. Additional information was as follows:
Accounts receivable 12/31/20
RM
418,500
Uncollectible accounts written off during 2020
17,200
Accounts receivable 12/31/19
391,700
Required:
Under the cash basis of net income determination, how much should Bangau-Bangau report as
revenue for 2020?
Answer:
Accrual basis revenue
RM
3,565,000
+ Beginning accounts receivable balance
391,700
− Ending accounts receivable balance
(418,500
)
− Write-offs of accounts receivable
(17,200
)
Cash basis revenue (cash collections on accounts receivable)
RM
3,521,000
Under the cash basis of net income determination, the company would not regard its accounts
receivable as revenue. To find cash basis revenue, add the decrease in accounts receivable to the
revenue figure and subtract the write-offs to determine cash collections on accounts receivable.
Problem 2
Dr. Rizal Hamid keeps his accounting records on the cash basis. During 2020 Dr. Rizal collected
RM320,000 in fees from his patients. At December 31, 2019, Dr. Rizal had accounts receivable
of RM30,000. At December 31, 2020 Dr. Rizal had accounts receivable of RM45,000 and had
collected deferred fee revenue of RM8,000.
Required:
On the accrual basis, what was Dr. Rizal’s patient service revenue for 2020?
Answer:
Cash basis revenue
)
+ Ending accounts receivable (12/31/20)
)
= Accrual basis revenue
