1. Alexandria and Charles Co are both accrual-method taxpayers. Alexandria owns all the stock of Charles Co. Alexandria supplied services to Charles Co and accrued income there from (represented by bookkeeping entries of accounts receivable and payable) of $10,000; Charles Co deducted $10,000. Later, Alexandria forgave the account owing in return for stock of Charles Co worth $6,000. How much income or loss must Alexandria and Charles Co recognize? What would result if Charles Co was on the cash method of accounting and had not deducted the $10,000?