Brown Corporation Had Consistently Reported Its Income by the Cash

question 94

Essay

Brown Corporation had consistently reported its income by the cash method. The corporation should have used the accrual method because inventories are material to the business. In 2017, Brown timely filed a request to change to the accrual method. At the beginning of 2017, Brown had accounts receivable of $75,000. Also, Brown had merchandise on hand with a cost of $150,000 and accounts payable for merchandise of $45,000. The accounts receivable, inventory, and accounts payable balance per books were zero. Determine the adjustment to income due to the change in accounting method and the amount that is allocated to 2017.

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Definitions:

Frontal Lobes

The part of the brain located behind the forehead that is responsible for executive functions such as judgment, planning, problem-solving, and impulse control.

Maturation

The process of becoming mature, involving growth and developmental changes, both physically and psychologically.

Fundamental Characteristics

The basic and essential attributes or qualities that define a subject or object.

Adolescents

Young people in the transitional stage from childhood to adulthood, usually ranging from ages 13 to 19.