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sammy [17]
3 years ago
9

ike started a calendar-year business on September 1st of this year by paying 12 months of rent on his shop at $650 per month. Wh

at is the maximum amount of rent that Mike can deduct this year under each type of accounting method
Business
1 answer:
frosja888 [35]3 years ago
8 0

Answer:

$7800 under the cash method and $2600 under the accrual method

Explanation:

Calculation to determine the maximum amount of rent that Mike can deduct this year under each type of accounting method

UNDER THE CASH METHOD

Cash method=$650*12

Cash method=$7800

UNDER THE ACCRUAL METHOD

Accrual method =4 months*650

Accrual method =$2600

(September 1st to December 31st =4 months)

Therefore the maximum amount of rent that Mike can deduct this year under each type of accounting method is :$7800 under the cash method and $2600 under the accrual method

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