John Deere is operated as a C corporation. The company received an order for a $12,000 tractor from a customer on June 30, Year 1 and delivered the tractor to the customer on July 31, Year 1. The company sent the customer a bill saying they had to pay for the tractor by no later than January 31, Year 2. John Deere uses a calendar year tax period. Based on phone calls with the customer in December of Year 1, the customer explained that it may have to file bankruptcy proceedings but was trying to work its way out of financial hardship before taking that option. The customer said that at worst it would be able to pay at least $9,000 of the bill. On January 15, Year 2, John Deere received a check from the customer for $9,000 and was informed it would receive no additional payment based on the outcome of the bankruptcy case. In addition to the transaction above, the following occurred:

• A different customer paid for the same type of tractor (at $12,000) on November 1, Year 1 and scheduled delivery for January 15, Year 2. John Deere included the income in its Year 1 financial accounting statements.

• The company both incurred and paid expenses for the following in Year 1:

Wages	$3,000
Rental costs for a warehouse	$4,000
Repairs	$2,000

• The company both incurred and paid expenses for the following in Year 2:

Wages	$4,000
Rental costs for a warehouse	$4,000
Repairs	$3,000

Fill in the blank: Assuming the local John Deere's operates on a calendar year-end under the accrual method and prefers to defer income whenver possible, the amount of net profit (loss) for tax purposes in Year 1 was $_______. Reminder: If the amount represents net profit, this is entered as a positive value (e.g. syntax: a $5,000 net profit amount should be entered as 5000) whereas if the amount represents a net loss this is entered as a negative value (e.g. syntax: a $5,000 net loss amount should be entered as -5000).

Fill in the blank: Assuming the local John Deere's operates on a calendar year-end under the accrual method and prefers to defer income whenever possible, the amount of net profit (loss) for tax purposes in Year 2 is $_______. Reminder: If the amount represents net profit, this is entered as a positive value (e.g. syntax: a $5,000 net profit amount should be entered as 5000) whereas if the amount represents a net loss this is entered as a negative value (e.g. syntax: a $5,000 net loss amount should be entered as -5000).