Business, 26.02.2020 01:28 mantha0402

Drake Appliance Company, an accrual basis taxpayer, sells home appliances and service contracts. Determine the effect of each of the following transactions on the company's 2015 gross income assuming that the company uses any available options to defer its taxes. A) In December 2014. the company received a $1,200 advance payment from a customer for an appliance that Drake special ordered from the manufacturer. The appliance did not arrive from the manufacturer until January 2015, and Drake immediately delivered it to the customer. The sale was reported in 20IS for financial accounting purposes. B) In October 2014. the company sold a 6-month service contract for $240. The company also sold a 36-month service contract for $1,260 in July 2015.

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Drake Appliance Company, an accrual basis taxpayer, sells home appliances and service contracts. Det...

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