income under the various methods. Gross income: Repair revenues Computer sales Total revenue Deductions: Cost of goods sold Employee wages Supplies, utilities, etc. Total deductions Taxable income Accrual Hybrid

income under the various methods. Gross income: Repair revenues Computer sales Total revenue Deductions: Cost of goods sold Employee wages Supplies, utilities, etc. Total deductions Taxable income Accrual Hybrid

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter3: Income Sources

Section: Chapter Questions

Problem 78P

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Question

Bonnie opens a computer sales and repair service during the current year. Her records for the year show:
Repair revenue
Computer sales
Computer purchases
Employee wages
Supplies, utilities, etc.
Gross income:
Repair revenues
Computer sales
Total revenue
Deductions:
Cost of goods sold
Employee wages
Supplies, utilities, etc.
Total deductions
Cash
Sales Made Received
Taxable income
$30,000
26,000
$22,000
18,000
Bonnie has computers on hand on December 31 that cost $40,000 and have a retail selling price of $65,000. Compute taxable
income under the various methods.
Liability
Incurred Cash Paid
Accrual
$55,000
12,000
9,000
Hybrid
$27,500
$
10,000
6,000

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