Required information Problem 9-60 (LO 9-5) [The following information applies to

Question

Required information Problem 9-60 (LO 9-5) [The following information applies to the questions displayed below. eremy is a calendar-year taxpayer who sometimes leases his business equipment to local organizations. He recorded the following receipts this year. Indicate the extent to which these payments are taxable income to Jeremy this year if Jeremy is (1) a cash-method taxpayer and (2) he is an accrual-method taxpayer. (Leave no answers blank. Enter zero if applicable.) Problem 9-60 Part-a a. $3,500 deposit from the Ladies' Club, which wants to lease a trailer. The club will receive the entire deposit back when the trailer is returned undamaged. Income under cash method Income under accrual method

Explanation / Answer

a. $0 Income under both Cash and Accrual method because A deposit of $3500 was recieved from a Ldies Club which is not taxable.

b. $2760 income under both the cash method and accrual method because advance payment of rent and interest are always taxable when received.

c. $320 of Income under Cash method, as per the accrual basis, the income would have been recognized in the prior year. The write-off of the apparent bad debt this year would be offset by the subsequent recovery. Hence, no change in taxable income.

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.