Jen Company decided to change its method of accounting from the cash basis to the accrual basis in 2019. Its taxable income for 2019 under the accrual basis was $250,000.

It determined that the balances of accounts receivable, inventory, and accounts payable as of December 2018 were:

a. What is Jen Company’s required adjustment due to the change in accounting methods?

b. What can Jen Company do with the adjustment?

Transcribed Image Text:

Accounts receivable Inventory Accounts payable $18,000 14,000 11,000