Question

Joel Hamilton, D.D.S., keeps his accounting records on the cash basis. During 2017, he collected $200,000 in fees from his patients. At December 31, 2016, Dr. Hamilton had accounts receivable of $18,000 and no liability for deferred fee revenue. At December 31, 2017, he had accounts receivable of $25,000 and a liability for deferred fee revenue of $8,000. Required: On an accrual basis, what was Dr. Hamilton's patient service revenue for 2017?

Answer 1

Under accrual basis accounting, all revenues are recognized in accounting records as and when they are accrued, irrespective of time of collection of cash for the same. On the other hand, under cash basis accounting, revenues are recognized only when they are collected, irrespective of time of accrual of the same. Under accrual basis accounting, all expenses are recognized in accounting records as and when they are incurred, irrespective of time of payment of cash for the same. On the other hand, under cash basis accounting, expenses are recognized only when they are paid, irrespective of time of incurring the same. $200,000 $0 Fees from patients collected during 2017 Add: Deferred fee revenue, beginning balance Less: Deferred fee revenue, ending balance -$8,000 $25,000 Add: Accounts receivable, ending balance -$18,000 $199,000 Less: Accounts receivable, beginning balance Dr.Hamilton's patient service revenue for 2017