Dana manages real estate and is a cash method taxpayer. She changes to the accrual method in 2014. Dana's business income for 2014 is $30,000 computed on the accrual method. Her books show the following:
_________________________ December 31, 2013 _________ December 31, 2014
Accounts receivable ......................$16,000 ......................$25,300
Accounts payable ..........................15,200 ........................11,800
a. What adjustment is necessary to Dana's income?
b. How should Dana report the adjustment?