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LO 1-4 d) Suppose that in addition to the basic contract, Brown Thumb will be paid an additional $3,000 if its city landscape design wins
LO 1-4 d) Suppose that in addition to the basic contract, Brown Thumb will be paid an additional $3,000 if its city landscape design wins the annual design competition next year. Should Brown Thumb accrue $3,000 revenue this year? Why or why not? 62. In January of year 0, Justin paid $4,800 for an insurance policy that covers his business property for accidents and casualties. Justin is a calendar-year taxpayer who uses the cash method of accounting. What amount of the insurance premium may Justin deduct in year in each of the following alternative scenarios? a) The policy covers the business property from April 1 of year 0 through March 31 of year 1. b) The policy begins on February 1 of year 1 and extends through January 31 of year 2 c) Justin pays $6,000 for a 24-month policy that covers the business from April 1, year 0, through March 31. year 2 d) Instead of paying an insurance premium, Justin pays $4,800 to rent his business property from April 1 of year through March 31 of year 1. 63. Ben teaches golf lessons at a country club under a business called Ben's Pure Swings (BPS). He operates this business as a sole proprietorship on the accrual ba- sis of accounting. Use the following accounting information for BPS to complete the firm's Schedule C: This year BPS billed clients for $86,700 and collected $61,000 in cash for golf lessons completed during the year. In addition, BPS collected an additional $14,500 in cash for lessons that will commence after year-end. Ben hopes to collect about half of the outstanding billings next year but the rest will likely be written off. Besides providing private golf lessons, BPS also contracted with the country club to staff the driving range. This year, BPS billed the country club $27.200 for the service. The club paid $17.000 of the amount but disputed the remainder. By year- end, the dispute had not been resolved, and while Ben believes he is entitled to the money, he has still not collected the remaining $10.200. BPS has accrued the following expenses (explained below): Advertising in the clubhouse) $13,150 LO 1-4 tax forms Pronal techers membership.eps RBO
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