LO.2, 5 Al is a medical doctor who conducts his practice as a sole proprietor. During 2014, he received cash of $280,000 for medical services. Of the amount collected, $40,000 was for services provided in 2013. At the end of 2014, Al had accounts receivable of $60,000, all for services rendered in 2014. In addition, at the end of the year, Al received $12,000 as an advance payment from a health maintenance organization (HMO) for services to be rendered in 2015. Compute Al’s gross income for 2014:
a. Using the cash basis of accounting.
b. Using the accrual basis of accounting.
c. Advise Al on which method of accounting he should use.