Using "The Big Picture" answer an interoffice memo to the partner in your CPA firm responsible for the account. The memo should address whether or not you feel that the gross income of the dental practice is being calculated correctly and an explanation to support your position.

THE BIG PICTURE Bob Daemmrich/Alamy Stock Photo CALCULATION OF GROSS INCOME In 2021, Dr. Cliff Payne, age 27, opened his dental practice as a sole proprietorship with a December 31 year-end. By the beginning of February, construction on his medical building was completed. He also leased a separate office building and entered into a contract to make improvements to it. In addition, early in the year, he invested $12,000 in the stock of an unrelated corporation. The following financial information shows the results of Dr. Payne's first year of operation: Revenues (amounts billed patients for dental services throughout the year) $385,000 Accounts receivable: January 1 Accounts receivable: December 31 52,000 During the year, Sam Jones, a contractor who owed Dr. Payne $4,000 for dental services, satisfied his account by installing solar panels on the roof of Dr. Payne's new medical building. As an undergraduate student, Dr. Payne took an accounting course in which he learned that the accrual method of accounting provides a good measure of the income and expenses of a business. Based on this knowledge and the above financial information, Dr. Payne concludes that the gross income for Federal income tax purposes is the $385,000 he billed his patients for the dental services rendered. Has Dr. Payne correctly calculated the gross income of his dental practice in its first year of operations? Is there an alternative method of accounting that would result in less taxable income in this first year? Read the chapter and formulate your response