Joe operates a business that locates and purchases specialized assets for clients, among other activities. Joe uses the accrual method of accounting but he doesnt keep any significant inventories of the specialized assets that he sells. Joe reported the following financial information for his business activities during year 0.

Determine the effect of each of the following transactions on the taxable business income. (Select "No Effect" from the dropdown if no change in the taxable business income.)

a. Joe has signed a contract to sell gadgets to the city. The contract provides that sales of gadgets are dependent upon a test sample of gadgets operating successfully. In December, Joe delivers $13,050 worth of gadgets to the city that will be tested in March. Joe purchased the gadgets especially for this contract and paid $9,300.

b. Joe paid $260 for entertaining a visiting out-of-town client. The client didnt discuss business with Joe during this visit, but Joe wants to maintain good relations to encourage additional business next year.

c. On November 1, Joe paid $560 for premiums providing for $56,000 of key man insurance on the life of Joes accountant over the next 12 months.

d. At the end of year 0, Joes business reports $11,400 of accounts receivable. Based upon past experience, Joe believes that at least $2,480 of his new receivables will be uncollectible.