b. The expenditure is a prepayment for 18 months of cleanin from November 2018 through April 2020? 14. Warren Company is a calendar year, cash basis firm. On Dece 2018, Warren paid $7,200 cash to a landscape service busine maintains the lawns and gardens around Warren's headquart much of this expenditure can Warren deduct in 2018 assumir a. The expenditure is a prepayment for four months of lands maintenance beginning May 1, 2019? b. The expenditure is a prepayment for 12 months of landsci maintenance beginning May 1, 2019? 15. Firm F, a calendar year taxpayer, owes a $200,000 long-tern unrelated creditor. In December, it paid $14,160 to the credit for the 12-month period from the prior September 1 through the following year. Compute the deduction for this payment a that: a. Firm Fuses the cash method of accounting for tax purpos b. Firm Fuses the accrual method of accounting for tax pury 16. Wahoo Inc., a calendar year taxpayer, leases equipment to ac $4,500 monthly rent. On November 27, 2018, Wahoo receive rent payment for the eight-month period beginning on Decem much of the payment must Wahoo recognize as 2018 taxable assuming that: a. Wahoo uses the cash method of accounting for tax purpos b. Wahoo uses the accrual method of accounting for tax purp 17. EFG, an accrual basis calendar year corporation, reported $5 income before tax on its financial statements prepared in acc GAAP. EFG's records reveal the following information: Page 6-33 The allowance for bad debts as of January 1 was Write-offs for the year totaled $13,800, and the addition t allowance for the year was $12,500. The allowance as of was $56,700. EFG paid a $17,500 fine to the state of Delaware for a viol pollution control laws. EFG was sued by a consumers group for engaging in false practices. Although nollosa n ad that the $50 The expenditure is a prepayment for six months of cleaning services from November 2018 through April 2019? b. The expenditure is a prepayment for 18 months of cleaning services from November 2018 through April 2020? 1. LO 6-5 14. Waren Company is a calendar year, cash basis firm. On December 6, 2018, Warnen paid $7.200 ensh to a landscape service business that maintains the laws and gardens around Warren's headquarters. How much of this expenditure can Warren deduct in 2018 assuming that: The expenditure is a prepayment for four months of landscape maintenance beginning May 1, 2019? b. The expenditure is a prepayment for 12 months of landscape maintenance beginning May 1, 2019? 1. LO 6-5, 15. Firm F, a calendar year taxpayer, owes a $200,000 long-term debt to an unrelated creditor. In December, it paid $14.160 to the creditor as interest for the 12-month period from the prior September 1 through August 31 of the following year. Compute the deduction for this payment assuming that: a. Firm Fuses the cash method of accounting for tax purposes. b. Firm Fuses the accrual method of accounting for tax purposes. 1. LO 6-5, 6-6 16. Wahoo Inc., a calendar year taxpayer, leases equipment to a customer for $4.500 monthly rent. On November 27, 2018, Wahoo received a $36,000 rent payment for the eight-month period beginning on December 1. How much of the payment must Wahoo recognize as 2018 taxable income assuming that: a. Wahoo uses the cash method of accounting for tax purposes? b. Wahoo uses the accrual method of accounting for tax purposes? 1. LO 6-7, 6-9 17. EFG, an accrual basis calendar year corporation, reported $500,000 net income before tax on its financial statements prepared in accordance with GAAP. EFG's records reveal the following information: Page 6-33 The allowance for bad debts as of January 1 was $58,000. Write-offs for the year totaled $13,800, and the addition to the allowance for the year was $12,500. The allowance as of December 31 was $56,700. EFG paid a $17.500 fine to the state of Delaware for a violation of state pollution control laws. EFG was sued by a consumers group for engaging in false advertising practices. Although EFG's lawyers are convinced that the suit is frivolous, its independent auditors insisted on establishing a $50,000 allowance for contingent legal liability and reporting a $50,000 accrued expense on the income statement