1. Brady; a calendar year, cash basis taxpayer; owns and operates his own landscaping business as a sole proprietorship. On December 27, 2020, he purchased $350 in office supplies with his credit card. The due date for his credit card payment was January 20, 2021, and he paid half of the statement balance on January 18, 2021. He paid the remaining balance of the statement on February 18, 2021. When can Brady deduct the office supply expense?

		He can deduct $350 in 2021
		He can deduct $0 in 2020
		He can deduct $350 in 2020
		He can deduct $175 in both 2020 and 2021

10 points

QUESTION 9

1. Justin; a calendar year, cash basis taxpayer; rents cabins. Because of a history of damages, he requires his customers to make a refundable deposit of $300 before renting a cabin. On December 28, 2020, Marie checked-in to one of the cabins. As required, she made the $300 deposit payment. When Marie checked-out on January 3, 2021, Justin inspected the cabin and found damage to the sheet rock in the master bedroom. After a long discussion, Marie agreed to allow Justin to keep $200 of the deposit to repair the damages. When and how much of the deposit must be included in Justin's income for tax purposes?

		$300 in 2021
		$200 in 2020
		$300 in 2020
		$200 in 2021

10 points

QUESTION 10

1. Orange Cable TV Company; a calendar year, accrual basis taxpayer; allows its customers to pay their subscriptions by the year in advance ($600) per year or two years in advance ($960). In September 2020, the company collected the following amounts applicable to future services:

October 2020 to September 2022 services (200 2-year contracts) $192,000

October 2020 to September 2021 services (200 1-year contracts) 120,000

Total $312,000

As a result of the above, how much should Orange Cable report as gross income for 2021?

		$258,000
		$312,000
		$54,000
		$78,000