A new comprehensive insurance policy requires an annual payment of $12,000 for the upcoming year. Coverage began on September 1, 2021, at which time the first payment was made. Mr. Pitt allows customers to pay using a credit card. At the end of the current year, various credit card companies owed Mr. Pitt $6,500. At the end of last year, customer credit card charges outstanding were $5,000.Employees are paid once a month, on the 10th of the month following the work period. Cash disbursements to employees were $8,200 and $7,200 for January 10, 2022, and January 10, 2021, respectively. Utility bills outstanding totaled $1,200 at the end of 2021 and $900 at the end of 2020.A physical count of inventory is always taken at the end of the fiscal year. The merchandise on hand at the end of 2021 cost $35,000. At the end of 2020, inventory on hand cost $32,000.At the end of 2020, Mr. Pitt did not have any bills outstanding to suppliers of merchandise. However, at the end of 2021, he owed suppliers $4,000.Required:Mr. Pitt’s 2021 cash basis net income (after one adjustment for depreciation expense) is $26,000. Determine net income applying the accrual accounting model. The effect on Mr. Pitt’s balance sheet of converting from cash to accrual. That is, would assets, liabilities, and owner’s equity be higher or lower and by what amounts?