Rockin and Rollin Studios uses the calendar year and the accrual method of accounting. It engages Sound Co. & Crew to provide mixing services in Year Two for a stated amount. Rockin and Rollin will pay Sound Co. & Crew in two payments, one at the end of Year One and the second six months later in Year Two. When will Rockin & Rollin properly deduct the payments to Sound Co. & Crew?

Year 1

Year 2

They can decide which year.

Never