122. LO7 Determine the proper year(s) for reporting the income in each of the following cases:
a. Lagoon Inc., an accrual basis taxpayer, owns an amusement park. The park is open April through September. In October, Lagoon begins selling discounted season passes for the upcoming season. By the end of the year, Lagoon has received
$40,000 from the advance sale of the discounted passes.
b. Arnie sells and repairs televisions. In December of the current year, a customer special-orders a television that retails for $2,600 (Arnie’s cost is $1,300). Arnie requires the customer to prepay $1,500 as a condition of placing the order.
c. Quick Systems, Inc., an accrual basis taxpayer, leases out computer equipment. During December, Quick receives $22,000 from customers as advance rent for January.
d. Trinh is a service representative for Harrington Corporation. Trinh and Harring- ton are cash basis taxpayers. In addition to her salary, Trinh receives a bonus equal to 5% of all receipts collected from her customers during the year. On December 30, a customer gives her a $5,000 check payable to Harrington for Trinh’s work during the current year. Trinh returns to her office on January 3 and promptly gives the check to the company’s controller.
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