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 2017. 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 2017.
(b) Determine Northland's profit on an accrual basis for 2017.
TAKING IT FURTHER
Which method do you recommend that Northland use? Why?

Transcribed Image Text:

2017 2016 Accounts payable Accounts receivable Accumulated depreciation Prepaid insurance Supplies Unearned revenue s 3,990 6,100 18,250 620 550 7,400 1,460 13,200 15,000 1,530 2,350 1,560