Zenith, Inc. is an accrual basis taxpayer that uses product claims to determine their liability. In December 2014, the company received from a customer a $500 claim for defective merchandise. Zenith paid the customer in January 2015. Also, in December 2014, the company received a bill of $800 for office supplies that had been purchased and used in November 2014. The bill was not paid until January 2015. In January 2015, the company received a claim for $600 for defective merchandise (warranty) purchased in 2014. Zenith paid the customer the $600 in February 2015. Assuming Zenith uses the recurring item exception to economic performance, the company's deductions for 2014 as a result of the above are (hint: need to apply all events, economic performance and 8.5 months).

Recurring item rules:

a.$500

b.$600

c.$800

d.$1,900

e.$1,300