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anzhelika [568]
3 years ago
9

In 2019, Chaya Corporation, an accrual basis, calendar year taxpayer, provided services to clients and earned $25,000. The clien

ts signed notes receivable to Chaya that have a fair market value of $22,000 at year-end. In addition, Chaya sold a 36-month service contract on June 1, 2019, and received payment in full of $12,000. Round any division to four decimal places and If required, round your final answer to the nearest dollar. How much income does Chaya report from these transactions in 2019?
Business
1 answer:
romanna [79]3 years ago
6 0

Answer:

Accrual shows face amount as revenue

revenue = $25,000

(12,000) (7/36)= $2,333 (regognized in 2017)

Total income reported in 2017 = $27,333

The next year she would show the remainder of 12,000 from 26 month contract

For tax purposes, max of 2 year deferral for payment recieved in advance.

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