Problem 4-32 (LO. 2)Selma operates a contractor's supply store. She maintains her books using the cash method. At the end of 2021, her accountantcomputes her accrual basis income that is used on her tax return. For 2021, Selma had cash receipts of $1,400,000, which included$200,000 collected on accounts receivable from 2020 sales. It also included the proceeds of a $100,000 bank loan. At the end of 2021,she had $250,000 in accounts receivable from customers, all from 2021 sales.a. Compute Selma's accrual basis gross revenues for 2021.$4b. Selma paid cash for all of the purchases. The total amount paid for merchandise in 2021 was $1,300,000. At the end of 2020, she hadmerchandise on hand with a cost of $150,000. At the end of 2021, the cost of merchandise on hand was $300,000.Compute Selma's gross income (profit) from merchandise sales for 2021.The cost of goods sold for 2021 under the accrual method is $Therefore, the gross profit from merchandise sales for2021 under the accrual basis is $

a. Selma's accrual basis gross receipts for 2021 = Cash receipts during 2021 - Cash collected from…

Answered: Selma operates a contractor's supply…

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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Taxpayer started a calendar-year business on 1 August 2020. On that date, Taxpayer paid $9,600 in rent for the period 1 August 2020 through 31 July 2021. Determine the maximum amount that Taxpayer may deduct in 2020 under both the cash and accrual methods of accounting.
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At the year end, Harold has a receivables balance of $100,000 and an allowance for receivebles of $5000. He has not yet accounted for a receipt of $500 in respect of a debt which he has previously provided against or a receipt of $1000 in respect of a debt which had been written off in the previous year. Harold wishes to maintain his allowance for receivables at 7% of receivables. What balance will be shown in his statement of financial position at the year end for receivables and the allowance for receivables?
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Clyde is a cash-method taxpayer who reports on a calendar-year basis. This year Paylate Corporation has decided to pay Clyde a year-end bonus of $1,450.Determine the amount Clyde should include in his gross income this year under the following circumstances. (Leave no answer blank. Enter zero if applicable.) Problem 5-53 Part-a (Algo) a. Paylate Corporation wrote the check and put it in Clyde’s office mail slot on December 30 of this year, but Clyde did not bother to stop by the office to pick it up until after year-end. Amount to be included in gross income - _______

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