Adam elects the accrual method of accounting for his business. What amount of deductions does Adam recognize

Question:

Adam elects the accrual method of accounting for his business. What amount of deductions does Adam recognize in year 0 for the following transactions?

a) Adam guarantees that he will refund the cost of any goods sold to a client if the goods fail within a year of delivery. In December of year 0, Adam agreed to refund

$2,400 to clients, and he expects to make payment in January of year 1.

b) On December 1 of year 0, Adam paid $480 for a one-year contract with CleanUP Services to clean his store. The agreement calls for services to be provided on a weekly basis.

c) Adam was billed $240 for annual personal property taxes on his delivery van.

Because this was the first time Adam was billed for these taxes, he did not make payment until January. However, he considers the amounts immaterial.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

McGraw-Hill's Taxation Of Individuals

ISBN: 9781259729027

2017 Edition

Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Question Posted: