QUESTION 1 Colbert operates a catering service since 2015. In November, 2018 Colbert received a payment of $9,000 for 20 months of catering services to be rendered from December 1, 2018 through August 1, 2020. REQUIRED: When must Colbert recognize the income if: a) He uses the accrual method of accounting b) He uses the cash method of accounting [2 Marks] QUESTION 2 Anne is a self-employed electrician who reports her business income using the cash method over a calendar year. During the year of 2018, Anne made the following payments: a) On September 1" of this year, Anne paid $2,280 of interest on a loan. The interest accrues evenly over 19 months ($120 per month) from June 1* of this year through December 31" of next year. b) In addition, on September 1" Anne also paid $2,700 for professional liability insurance. The policy begins on March 1, 2019 through February 29, 2020. REQUIRED: Determine the amount of interest and insurance can Anne deduct in the year 2018? Show all calculations. [2 Marks) QUESTION 3 Judy is a self-employed musician who performs for a variety of events. This year Judy was fined $250 by the city for violating the city's noise ordinance with a relatively loud performance. As a consequence, Judy contributed $1,000 to a campaign committee formed to recall the city's mayor. Judy normally hires three part-time employees to help her schedule events and transport equipment. Judy paid a total of $33,000 to her employees through June of this year. In June Judy fired her part-time employees and hired her husband to replace them. However, Judy paid him $55,000 rather than $33,000. Judy is on the cash method and calendar year. REQUIRED: Compute the amount of deductible business expenses for Judy for the current year. Indicate the reason for non-deductible business expenses, if any. 12 Marks) QUESTION 4 Sam operates a small chain of pizza outlets in Fort Collins, Colorado. In November of this year Sam decided to attend a two-day management training course. Sam could choose to attend the course in Denver or Los Angeles. Sam decided to attend the course in Los Angeles and take an eight-day vacation immediately after the course. Sam reported the following expenditures from his trip: Expenditure Amount Course fees $2.500 Air faire Hotel (10 nights) 1,200 Rental car (10 nights) 900 Mcals (10 nights) 1,500 800 REQUIRED: Calculate the amount of travel expenditures can Sam deduct from his trip [2 Marks [TOTAL: 8 MARKS]