Jiffy Clerical Services is a corporation which furnishes temporary office help to its customers. Billings are rendered monthly based on predetermined hourly rates. You have examined the company's financial statements for several years. Following is an abbreviated statement of assets and liabilities on the modified cash basis as of December 31, 19X0:

Unrecorded receivables were \(\$ 55,000\) and payables were \(\$ 30,000\).
{Required:}

a. Prepare the report you would issue covering the statement of assets and liabilities as of December 31, 19X0, as summarized above, and the related statement of cash revenue and expenses for the year ended that date.

b. Briefly discuss and justify your modifications of the conventional report on accrual basis statements.

Transcribed Image Text:

Assets: Cash..... Advances to employees Equipment and autos, less accumulated depreciation Total assets. Liabilities: Employees' payroll taxes withheld Bank loan payable Estimated income taxes on cash basis profits. Total liabilities Net assets .. Represented by: Common stock... Cash profits retained in the business $20,000 1,000 25,000 $46,000 $ 8,000 10,000 10,000 $28,000 $18,000 $ 3,000 15,000 $18,000