Your new client has not prepared financial statements for three years since December 31, 2016. The company used the accrual method of accounting and reported income on a calendar year basis prior to 2017. During the three years since December 31, 2016 his cash receipts and cash disbursements records were maintained and sales on account were entered, when made, directly into an accounts receivable subsidiary ledger. However, no general ledger postings have been made since the December 31, 2016. Your examination has disclosed balances at the beginning and the end of the three-year period as follows: Dec. 31, 2016 Dec. 31, 2019 Aging of accounts receivable Less than 1 year old 176,120 282,000 1 to 2 years old 12,000 18,000 2 to 3 years old 8,000 Total accounts receivable 188,120 308,000 Inventories 116,000 188,000 Accounts payable - merchandise purchases 50,000 110,000 You have satisfied yourself as to the accuracy of the balances shown above. Other information available to you is as follows: 2017 2018 2019 Cash received on account applied to: Current years collections 1,480,000 1,618,000 2,088,000 Prior year's accounts 134,000 150,000 168,000 Other accounts 6,000 4,000 64.120 Total 1,620,000 1,772,000 2,320,120 Cash sales 170,000 260,000 312,000 Disbursements for merchandise purchases 1,792,500 1,412,000 1,738,000 No account balances have been written off as uncollectible during the three-year period. The ratio of gross profit to sales remains constant from year to year