A company uses cash basis of accounting. Company collected $850,000 from its customers during 2010. Customers owed Slaughter $50,000 of accounts receivable at the beginning of 2010, and $90,000 of accounts receivable at the end of 2010. What is Slaughter's sales revenue for 2010 under the accrual basis of accounting?

Under the cash basis, you only report actual receipts. When the $50,000 in A/R was received, it was shown as part of the $850,000. The $90,000 has not been received, so it is not shown in the $850,000. Using this explanation, can you figure out the revenue using the accrual basis. Give it a try. If I see what you are doing, it gives me a better feeling for what you do or don't understand. Thanks.

Thank you for the hints... I think it should be:
So 850K + 90K = 940K
Is that correct?

Thank you for the hints... I think it should be:
So 850K + 90K = 940K
Is that correct?

Not quite. The $90,000 addition is correct, but the $850,000 includes the $50,000 that was actually earned in the prior year.

I am getting confused, because 50K was collected in cash basis accounting (present year), but in accrual basis it was reported in prev year...
850,000.00 Cash during 2010
50,000.00 - 90,000.00 = 40k
40k + 850k = 890K

That's right. Do you completely understand it now?

The $50,000 was earned in the prior year. The $90,000 was earned in the current year.

Yes I do. After my 1st response, I started to think... and I had to walk away from my computer. Lol.
I appreciate your help. This is a great site.

Good. Thanks for working with me and for the appreciation expressed. :)