Your examination of the records of Northland Corp. shows the company collected $78,100 in cash from customers and paid $53,900 in cash for operating costs. If Northland followed the accrual basis of accounting, it would report the following year-end balances:

(a) Determine Northland's profit on a cash basis for 2012.
(b) Determine Northland's profit on an accrual basis for 2012.
(c) Which method do you recommend Northland use? Why?

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2012 2011 Accounts payable Accounts receivable Accumulated depreciation Prepaid insurance Unearned revenue Income tax payable $ 905$ 820 1,4501,600 8,625 7,500 650 780 4,600 4,035 810 700