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andreev551 [17]
3 years ago
11

Copper Corporation, a C corporation, had gross receipts of $25 million in 2015, $26 million in 2016, and $23 million in 2017. Go

ld Corporation, a personal service corporation (PSC), had gross receipts of $24 million in 2015, $27 million in 2016, and $25 million in 2017. Which of the corporations will be allowed to use the cash method of accounting in 2018?
a. Copper Corporation only.
b. Gold Corporation only.
c. Both Copper Corporation and Gold Corporation.
d. Neither Copper Corporation nor Gold Corporation.
e. None of the above.
Business
2 answers:
Aleksandr [31]3 years ago
4 0

Answer:c. Both Copper Corporation and Gold Corporation.

Explanation:Cash accounting is an accounting method in which payment receipts are recorded during the period they are received, and expenses are recorded in the period in which they are actually paid. In other words, revenues and expenses are recorded when cash is received and paid, respectively.

Generally, a small business can use either the overall cash method of accounting or an overall accrual method of accounting. ... The overall cash method of accounting is available for S corporations, partnerships that do not have a C corporation as a partner, and personal service corporations (PSCs).

OLEGan [10]3 years ago
4 0

Answer:

Explanation:

Corporation/businesses that qualify for cash based accounting:

• Individuals

• Service Business

• Custom Manufacturer

• Qualified Personal Service

• Farming Business

A corporation or partnership meets the gross receipts test of this subsection for any taxable year if the average annual gross receipts of such entity for the 3-taxable-year period ending with the taxable year which precedes such taxable year does not exceed $25,000,000.

Average = total earnings in 3 years/3

= ($25 million + $26 million + $23 million)/3

= 24.67 million

$24.67 million is less than $25 million

Therefore, copper corporation meets the criteria for cash based accounting.

Gold corporation is a personal corporation so it also meets rhe criteria for cash based accounting.

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SCHEMBRI MANUFACTURING CORPORATION

Statement of Comprehensive Income

For the Year Ended December 31, 2021

($ in 000s)

Sales revenue $17,900

Cost of goods sold ($7,500)

Gross profit $10,400

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Selling expenses ($1,430)

General and administrative expenses ($930)

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Total operating expenses ($3,960)

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Other income (expenses):-

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Interest expenses $(310)

Interest revenue $200

Other income (expenses) $(460)

Income from continue operation before income tax $5,980

(6,440-460)

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Income from continuing operations $4,485

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Income from operation of discontinued component (1,660-680) $980

Income tax expenses $(310)

Income from discontinued operation $670

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Net income $5,155

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Other comprehensive income (loss)

Unrealized gain from investment,net of tax [460*(1-25%)] $345

Loss from foreign currency translation , net of tax [380*(1-25%)] $(285)

Total other comprehensive income $60

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Earning per share :-

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Statement of comprehensive income

For the year ended December 31,2021

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