Sudzy Corporation, a computer vendor and consulting company, uses the accrual method of accounting. Its tax year is the calendar year. The following are three of the corporation's transactions during the current year: (Click the icon to view the transactions.) Read the requirements. Requirement a. How should Sudzy Corporation treat these transactions? What rules apply? (Enter a "0" if none of the expense can be deducted.) 1. Sudzy Corporation hired a contractor to remodel its sales floor. The contractor completed the remodeling on November 30. On December 15, Sudzy received a $61,000 bill from the contractor. Sudzy immediately contacted the contractor to contest $7,000 of the total charges, arguing that it exceeded the price that was agreed upon. Sudzy made no payment on the bill during its current tax year. What rules apply? Amount deductible in current year 2. Sudzy offers a 2-year warranty on all of its computer systems. For sales of computers in the current year, it paid $10,000 to service warranties during the current tax year, and it expects to pay $14,000 to fulfill the remaining warranty obligations next year. What rules apply? Amount deductible in current year 3. Every year, Sudzy offers a series of nine trade seminars from November 1 through July 31. It receives all registration fees from participants by October 1, before the seminars begin. As of December 31, two of the nine seminars are completed, and the next seminar is scheduled for January 14-15. The expenses incurred in performing the seminars are routine each year. On the first of each month from November through July, Sudzy pays the $550 monthly rent for the seminar location. On September 16, Sudzy signs a contract with the seminar teacher, a computers expert and excellent public speaker. The contract requires Sudzy to pay the teacher $1,200 after each seminar, a total of $10,800. On October 3, Sudzy signs a contract with a local printing company, which will provide text materials for the seminars. Sudzy pays the printer $150 after each seminar's materials are delivered the day before the seminar. The amounts paid in the current year deductible because they Complete the table below to show the amounts that Sudzy can deduct in the current year. (Enter a "0" if an amount is not deductible.) Deductible in current year Deductible in current year for Total deduction in current for amounts paid amounts not yet paid year Rent Seminar teacher compensation The amounts paid in the following year deductible in the current year because they Printer Total Requirement b. How would your answer change if Sudzy Corporation were a cash-method taxpayer? Complete the table below to identify which of your answers from Part a will change, and the amount Sudzy can deduct in the current year assuming that Sudzy were a cash-method taxpayer. (Enter a "0" if Sudzy cannot deduct any amount in the current year.) Assuming Sudzy were a cash-basis tax payer Does your answer from Amount deductible in the Transaction 1. 2. 3. Part a change? current year