The correct treatment would be to report your business cash transactions for the tax year.
The 1099-MISC is merely an informational return. If you are reporting your business on a cash basis, you should be reporting the income you received during the tax year and deducting the expenses you paid during the tax year. The entry you have lined out above makes you an accrual-based reporter because you are reporting income you had not received during the tax year.
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