Q1

Gustav, Inc. uses the accrual basis to account for all sales transactions. Sales for 2018 total $500,000. Included in this amount is $75,000 in receivables from sales on installment. Installment sales are considered revenue for book purposes, but not for tax purposes. Operating expenses total $150,000 and are treated the same for book and tax purposes.

Required:

a. What is the book basis of the installment sales receivable?

b. What is the tax basis of the installment sales receivable?