3 Rex loves to work with his hands and is (BAM) for business as a sole proprietorship. BAM produces miniature characters ranging from sci-fi characters (his favorite) to historical characters like George Washington (the most popular). Business has been going very well for him, and he has provided the following information relating to his business. very good at making small figurines. Three years ago, Rex opened Bronze Age Miniatures 2 points a. Rex received approval from the IRS to switch from the cash method of accounting to the accrual method of accounting effective January 1 of this year. At the end of last year, BAM reported accounts receivable that had not been included in income under the accrual method of $23,100 and accounts payable that had not been deducted under the accrual method of $5,000. Book b. In March, BAM sold 9,000 miniature historical figures to History R Us Inc. (HRU), a retailer of historical artifacts and figurines, for $225,000 C. HRU was so impressed with the figurines that it purchased in March that it wanted to contract with BAM to continue to produce the figurines for it for the next three years. HRU paid BAM $412.632 ($22 per figurine) on October 30 of this year, to produce 521 figurines per month for 36 months beginning on November 1 of this year. BAM delivered 521 figurines on November 30 and again on December 30. Rex elects to use the deferral method to account for the transaction. Print d. Though the sci-fi figurines were not quite as popular, BAM sold 412 figurines at a sci-fi convention in April. Rex accepted cash only References and received $15,244 for these sales e. In January, BAM determined that it would not be able to collect on $3,000 of its beginning-of-the-year receivables, so it wrote off $3,000 of specific recelvables. BAM sold 124,000 other figurines on credit for $272,800. BAM estimates that it will be unable to collect 5 percent of the sales revenue from these sales but it has not been able to specifically identify any accounts to write off. f Assume that BAM correctly determined that its cost of goods sold this year is $190,960 g. The sci-fi convention in April was held in Chicago, Illinois. Rex attended the convention because he felt it was a good opportunity to gain new customers and to get new ideas for figurines. He paid $800 round-trip airfare, $169 for entrance to the convention, $274 for lodging, $121 for cab fare, and $198 for meals during the trip. He was busy with business activities the entire trip h. On August 1, BAM purchased a 12-month insurance policy that covers its business property for accidents and casualties through July 31 of next year. The policy cost BAM $7980 L BAM reported depreciation expense of $9,550 for this year. Rex had previously operated his business out of his garage, but in January he decided to rent a larger space. He entered into a lease agreement on February 1 and paid $17,400 ($1,450 per month) to possess the space for the next 12 months (February of this year through January of next year). k. Before he opened his doors for business, Rex spent $53,000 investigating and otherwise getting ready to do business. He L In December, BAM agreed to a 12-month, $12,500 contract with Advertise-With-Us (AWU) to produce a radio ad campalgn. BAM m. In November of this year, BAM paid $5,100 in business property taxes (based on asset values) covering the period December 1 of expensed $5,000 immediately and is amortizing the remainder using the straight-line method over 180 months. paid $3,600 up front (in December of this year) and AWU agreed that BAM would owe the remaining $8,900 only if BAM's sales increased by 15 percent over the 9-month period after the contract was signed this year through November 30 of next year. In November of last year, BAM paid $4,100 for business property taxes (based on asset values) covering the period December 1 of last year through November 30 of this year