Rex loves to work with his hands and is very good at making small figurines. Three years ago, Rex opened Bronze Age Minlatures (BAM) for business as a sole proprletorship. BAM produces mInlature characters rangling from scl-fi characters (his favorite) to historlcal characters like George Washington (the most popular). BusIness has been golng very well for hIm, and he has provided the following Information relating to his business. Requlred: a. Rex recelved approval from the IRS to switch from the cash method of accounting to the accrual method of accounting effectlve January 1 of this year. At the end of last year, BAM reported accounts recelvable that had not been Included in Income under the accrual method of $17,500 and accounts payable that had not been deducted under the accrual method of $5,700. b. In March, BAM sold 6,900 mInlature historical figures to HIstory R Us Incorporated (HRU), a retaller of historical artlfacts and figurines, for $172,500. c. HRU was so Impressed with the figurines that It purchased In March that It wanted to contract with BAM to continue to produce the figurines for It for the next three years. HRU pald BAM $399,168 ( $22 per figurlne) on October 30 of this year to produce 504 figurines per month for 36 months beginning on November 1 of this year. BAM dellvered 504 figurlnes on November 30 and agaln on December 30. Rex elects to use the deferral method to account for the transaction. d. Though the scl-fi figurlnes were not quite as popular, BAM sold 411 figurlnes at a scl-fi convention In Aprll. Rex accepted cash only and recelved $15,207 for these sales. e. In January, BAM determIned that It would not be able to collect on $4,200 of Its beginning-of-the-year recelvables, so It wrote off $4,200 of specific recelvables. BAM sold 176,000 other figurines on credit for $387,200. BAM estimates that It will be unable to collect 5 percent of the sales revenue from these sales, but it has not been able to specifically identify any accounts to write off. f. Assume that BAM correctly determIned that Its cost of goods sold using an approprlate Inventory method is $271,040 this year. g. The scl-fi convention In April was held In Chicago, Illinols. Rex attended the convention because he felt It was a good opportunity to galn new customers and to get new Ideas for figurlnes. He pald $900 round-trip alrfare, $197 for entrance to the convention, $295 for lodging, $125 for cab fare, and $178 for meals at restaurants durling the trip. He was busy with business activitles the entire trip. h. On August 1, BAM purchased a 12-month Insurance policy that covers Its business property for accidents and casualties through July 31 of next year. The policy cost BAM $7,860. I. BAM reported depreclation expense of $7,500 for this year. J. Rex had previously operated his business out of his garage, but In January he decided to rent a larger space. He entered Into a lease agreement on February 1 and pald $18,720 ( $1,560 per month) to possess the space for the next 12 months (February of this year through January of next year). k. Before he opened his doors for business, Rex spent $50,000 Investigating and otherwise getting ready to do business. He expensed $5,000 Immedlately and Is amortizIng the remalnder using the stralght-IIne method over 180 months. I. In December, BAM agreed to a 12-month, $11,750 contract with AdvertIse-WIth-Us (AWU) to produce a radio ad campalgn. BAM pald $3,900 up front (In December of this year), and AWU agreed that BAM would owe the remalning $7,850 only If BAM's sales Increased by 15 percent over the 9 -month perlod after the contract was signed. m. In November of this year, BAM pald $3,000 In business property taxes (based on asset values) covering the perlod December 1 of this year through November 30 of next year. In November of last year, BAM pald $2,000 for business property taxes (based on asset values) covering the perlod December 1 of last year through November 30 of this year. Calculate the business taxable Income for BAM assuming that BAM elects to account for Its Inventory of minlatures. Note: Enter the wrlte-off of the recelvable under e-1 and the sales under e-2. Negatlve amounts should be Indlcated by a minus sign. Do not round Intermedlate calculations. Round your final answers to the nearest whole dollar amount