Class Corp. maintains its accounting records on the cash basis but restates its financial statements to the accrual method of accounting. Class had $60,000 in cash-basis pretax income for 2006. The following information pertains to Class’s operations for the years ended December 31, 2006 and 2005:
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|
2006 |
2005 |
|
|
Accounts receivable |
$40,000 |
$20,000 |
|
Accounts payable |
15,000 |
30,000 |
Under the accrual method, what amount of income before taxes should Class report in its December 31, 2006 income statement?
- $25,000
- $55,000
- $65,000
- $95,000