Solution:
a. $14,900 AR is $6,250
AP = 14,900 - 6250 = $8650
∴ $8650 * 25% = 2162.5
( 25% = Positive adjustment that is added for 4 years is 25% for an year)
b. $54,800
Sale to the HRU
c. With the help of deferral method for accrual , the amount obtain is follows:
2 mos. $21 for unit x 600 units
= $25,200
d. $17,496
Sales for Sci-fi convention
e. Will only deduct money i.e. Considered as noncollectable or else expense for schedule c
= $2100
For the accrual method given income at the time of sale
= $233100
f. Costs of goods which are sold
= $159840
g. As $610 airfare in addition with + $165 convention fee also + $222 for lodging +$68 for cab fee+ $164 for meals
= $1229
h. As the earlier payment qualifies comes under the 12-month rule and which is payment liability thus it meets the economic performance test when it pays the insurance company in august
= $5040
i. For depreciation $8450
j. Economic performance for rent expense happens for the rental period
Due to no expenditure has happened , the 12 month rule is inapplicable
Rex may only deduct rent for 11 months it was renting the property ( 11 months * $1710 )
= $18810
K. As the expended immediately = $41,250 ; $41,250 / 180 months = 229
229 * 12 = 2750 other expense for schedule c
L. As $7900 is un-deduct able due to liability which is not constant
Economic preference for the $4200 occurs as AWU provides services
Also BAM may only cut the portion of this extra credit that relates to
December ( 4200 / 12 ) = $350
M. As tax payment liabilities are economic performance and the deduction occurs BAM pay taxes
= $5100
