The Slaughter Company uses the cash basis of accounting.Slaughter 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?

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Under the accrual basis of accounting, sales revenue is recognized when earned, not necessarily when cash is received. To calculate sales revenue for 2010, start with the cash collected from customers ($850,000), add the ending accounts receivable ($90,000) to include sales made but not yet collected, and subtract the beginning accounts receivable ($50,000) to exclude sales made before 2010 but collected in 2010. This calculation results in $850,000 + $90,000 - $50,000 = $890,000.

The Slaughter Company Uses the Cash Basis of Accounting