LO3 For each of the following situations, determine the proper year for recognition of the income or deduction if the taxpayer is (1) a cash basis taxpayer and (2) an accrual basis taxpayer:

a. Tindle Corporation purchases office supplies costing $600 on December 21, 2010.

Tindle pays for the office supplies on January 18, 2011.

b. Raashan pays his employee, Sara, $22,450 in salary up to December 23, 2010.

As of December 31, 2010, Raashan owes Sara $560 for the period of December 23 through December 31.

The $560 is to be paid on the next pay date, which is January 5, 2011.

c. Jerri paints Roland’s house in December 2010. Roland pays Jerri’s bill in January 2011.

d. Devi sells Aaron a car on August 1, 2010, for $36,000. The terms of the sale call for Aaron to pay Devi $18,000 on August 1, 2010, and $9,000 on August 1 of 2011 and 2012.

e. Barnie’s Paint Barn purchases new spray painters on January 15, 2010, at a cost of

$3,000. The spray painters have an estimated useful life of 10 years, but the tax life is 5 years.