1 2.5 points Company Y began business in February 2020. By the end of the calendar year, it had billed its clients for $3.5 million of services and had incurred $800,000 of operating expenses. As of December 31, it had collected $2.9 million of its billings and had paid $670,000 of its expenses. It expects to collect the remaining outstanding bills and pay the remaining expenses by March 2021. Company Y adopted a calendar year for federal tax purposes. It may use either the cash method or the accrual method of accounting on its first tax return, and it has asked you to quantify the value of using the cash method for the first year. In doing so, assume Company Y uses a 5 percent discount rate to compute NPV. Use Appendix A. (Round discount factor(s) to 3 decimal places, intermediate computations and final answers to the nearest whole dollar amount. Enter your answers in dollars not in millions of dollars.) Answer is complete but not entirely correct. Amount Accrual method: Income from billings Expenses incurred Net income in 2020 $ 3,500,000 800,000 $ 2,700,000 Cash method: Cash received Expenses paid Net income in 2020 $ 2,900,000 670,000 $ 2,230,000 $ $ Income deferred until 2021 under cash method Tax on income deferred for one year NPV of deferred tax Decrease in tax cost from cash method 470,000 305,500 152,130 10,387 % $