123. LO7 How much income would an accrual basis taxpayer report in 2010 in each of the following situations?
a. Toby’s Termite Services, Inc., provides monthly pest control on a contract basis. Toby sells a 1-year contract for $600 and a 2-year contract for $1,080. In October, Toby sells 10 one-year contracts and 5 two-year contracts.
b. John’s Tractor Sales receives a $150 deposit from a customer for a new tractor that the customer orders in December. The tractor arrives the following February, at which time the customer pays the remaining $9,800 of the agreed-upon sales price.
c. A customer of First Financial Lending sends First Financial two $600 checks in December in payment of December and January interest on a loan.
d. First Financial Lending receives interest payments totaling $8,400 in January 2011 in payment of December 2010 interest on loans.
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