Nancy operates a business that uses the accrual method of accounting. In December, Nancy asked her brother, Hank, to provide her business with consulting advice. Hank billed Nancy for $8,300 of consulting services in year O (a reasonable amount), but Nancy was only able to pay $5,100 of the bill by the end of this year. However, Nancy paid the remainder of the bill in the following year. a. How much of the $8,300 consulting services will Hank include in his income this year if he uses the cash method of accounting? What amount can Nancy deduct this year for the consulting services? Amount included by Hank Amount deducted by Nancy

Nancy operates a business that uses the accrual method of accounting. In December, Nancy asked her brother, Hank, to provide her business with consulting advice. Hank billed Nancy for $8,300 of consulting services in year O (a reasonable amount), but Nancy was only able to pay $5,100 of the bill by the end of this year. However, Nancy paid the remainder of the bill in the following year. a. How much of the $8,300 consulting services will Hank include in his income this year if he uses the cash method of accounting? What amount can Nancy deduct this year for the consulting services? Amount included by Hank Amount deducted by Nancy

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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