74. This year William provided $4,200 of services to a large client on credit. Unfortunately, this client has recently encountered financial difficulties and has been unable to pay William for the services. Moreover, William does not expect to collect for his services. William has “written off clear” the account and would like to claim a deduction for tax purposes.

a. What amount of deduction for bad debt expense can William claim this year if he uses the accrual method?

b. What amount of deduction for bad debt expense can William claim this year if he uses the cash method?

75. Dustin has a contract to provide services to Dado Enterprises. In November of year 0, Dustin billed Dado

$10,000 for the services he rendered during the year.

Dado is an accrual-method proprietorship that is owned and operated by Dustin’s father.

a. What amount of revenue must Dustin recognize in year 0 if Dustin uses the cash method and Dado remits payment for the services in December of year 0? What amount can Dado deduct in year 0?

b. What amount of revenue must Dustin recognize in year 0 if Dustin uses the accrual method and Dado remits payment for the services in December of year 0? What amount can Dado deduct in year 0?

c. What amount of revenue must Dustin recognize in year 0 if Dustin uses the cash method and Dado remits payment for the services in January of year 1?
What amount can Dado deduct in year 0?

d. What amount of revenue must Dustin recognize in year 0 if Dustin uses the accrual method and Dado remits payment for the services in January of year 1?
What amount can Dado deduct in year 0?