claire asked:
Swan Appliance Company, an accrual basis taxpayer, sells home appliances and service contracts. Determine the effects of each of the followings transaction assuming that the company uses any available options defer its taxes
A.In december 2008, the company received $1,200 advance payment from a customer for an appliance that swan Special ordered from the manufacturer. The appliance did not arrive from the manufacturer until jan 2009, and swan immediately delivered it to the customer. The sale was reported in 2009 for financial accounting purpose.
B. In june 2009 the company sold a 12 month service for $600. The company also sold 36month contract for $1,800 in december 2009.
C. On 31 december 2009 the company sold an appliance for $1,200. The company received $500 cash and a note from the customer for $700 and $260 interest to be paid at the rate of $40 a month for 24 months. Because of customers poor credit record the fair market value of the note was only 600. The cost of the appliance was $750
appliancezone.com
Swan Appliance Company, an accrual basis taxpayer, sells home appliances and service contracts. Determine the effects of each of the followings transaction assuming that the company uses any available options defer its taxes
A.In december 2008, the company received $1,200 advance payment from a customer for an appliance that swan Special ordered from the manufacturer. The appliance did not arrive from the manufacturer until jan 2009, and swan immediately delivered it to the customer. The sale was reported in 2009 for financial accounting purpose.
B. In june 2009 the company sold a 12 month service for $600. The company also sold 36month contract for $1,800 in december 2009.
C. On 31 december 2009 the company sold an appliance for $1,200. The company received $500 cash and a note from the customer for $700 and $260 interest to be paid at the rate of $40 a month for 24 months. Because of customers poor credit record the fair market value of the note was only 600. The cost of the appliance was $750
appliancezone.com
2 Responses
February 4th, 2010 at 2:58 am
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This isn’t a homework board. However if you’d like to post YOUR answer and explain how you arrived at it we’ll be more than happy to critique your work.
Y!A does have a homework board, but this is not it.
February 4th, 2010 at 5:38 pm
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To maximize these alternatives, the company should be on an accrual accounting basis.
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