CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN: 9780357110362
Author: Murphy
Publisher: CENGAGE L
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Chapter 3, Problem 77P
During the last five months of the year, Dwana opens a new Internet telecommunications business called Dwan-Com. Dwan-Com bills $50,000 of revenues, but receives only $40,000 cash. Dwan-Com incurs $3,000 of supply expenses, and $41,000 of labor costs. Dwan-Com pays for $2,200 of the supplies and $38,000 of the labor costs in the current year.
- a. What is Dwan-Com’s taxable income if it elects the cash method of accounting?
- b. What is Dwan-Com’s taxable income if it elects the accrual method of accounting?
- c. What method of accounting do you recommend that Dwan-Com elect?
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Chapter 3 Solutions
CONCEPTS IN FED.TAX.,2020-W/ACCESS
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