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P1:6-43 (similar to) Pennington, Inc., an engineering consulting firm, uses the cash method of accounting and is a calendar year taxpayer. Read the requirement. a.
P1:6-43 (similar to) Pennington, Inc., an engineering consulting firm, uses the cash method of accounting and is a calendar year taxpayer. Read the requirement. a. Compute the amount of Pennington's current year deductions for the following transactions: On November 1 of the current year, it entered into a lease to rent some office space for five years. The lease agreement states that the lease payments are $15,600 per year, payable in advance each November 1 for the following 12-month period. Under the terms of the lease, Pennington is required to pay a $2,000 deposit, refundable upon the termination of the lease. b. On December 1 of the current year, Pennington also renewed its malpractice insurance, paying $28,800 for the three-year contract. On December 31 of the current year, Pennington mailed out a check for $5,500 for drafting services performed for it during the current year by an individual who lives in another city. d. On December 31, the firm received a shipment of $1,300 worth of stationery and other office supplies. Pennington has an open charge account with the office supply company, which bills the firm monthly for charges made during C. the year. e. On December 31, Pennington picked up some work that a local printing company had done for it, which amounted to $600. The firm charged the $600 with its corporate credit card. (Enter a "0" if no current year deduction is allowed.)
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