Your examination of the records of Northland Co. shows the company collected $136,200 cash from customers and paid $108,700 cash for operating costs in 2014. If Northland followed the accrual basis of accounting, it would report the following year-end balances:

Instructions
(a) Determine Northland's profit on a cash basis for 2014.
(b) Determine Northland's profit on an accrual basis for 2014.
TAKING IT FURTHER Which method do you recommend Northland use? Why?

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2014 Accounts payable Accounts receivable Accumulated depreciation Prepaid insurance Supplies Unearned revenues 3,990 6,100 18,250 620 550 7,400 2013 S 1,460 13,200 15,000 1,530 2,350 1,560