Imani, an accrual basis taxpayer, sold goods in December 2023 for $20,000. The customer was unable to pay cash. So the customer gave Imani a note for S 20,000 that was payable in April 2024. The note bore interest at the Federal rate. The fair market value of the note at the end of 2023 was $18,000. Imani collected $20,500 from the customer in April 2024, $20,000 principal plus $500 interest. Under the accrual method, Imani must recognize gross income of: a. S 20,500 in 2024. b. $20, 500 in 2023. c. $18,000 in 2023 and $2,500 in 2024. d. $20,000 in 2023 and $500 in 2024.

Imani, an accrual basis taxpayer, sold goods in December 2023 for $20,000. The customer was unable to pay cash. So the customer gave Imani a note for S 20,000 that was payable in April 2024. The note bore interest at the Federal rate. The fair market value of the note at the end of 2023 was $18,000. Imani collected $20,500 from the customer in April 2024, $20,000 principal plus $500 interest. Under the accrual method, Imani must recognize gross income of: a. S 20,500 in 2024. b. $20, 500 in 2023. c. $18,000 in 2023 and $2,500 in 2024. d. $20,000 in 2023 and $500 in 2024.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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