Drake Appliance Company, an accrual basis taxpayer, sells homeappliances and service contracts. Determine the...

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Accounting

Drake Appliance Company, an accrual basis taxpayer, sells homeappliances and service contracts. Determine the effect of each ofthe following transactions on the company's 2019 gross incomeassuming that the company uses any available options to defer itstaxes.
a. In December 2018, the company received a$1,200 advance payment from a customer for an appliance that Drakespecial ordered from the manufacturer. The appliance did not arrivefrom the manufacturer until January 2019, and Drake immediatelydelivered it to the customer. The sale was reported in 2019 forfinancial accounting purposes.
What amount is included in the 2019 gross income?
$
b. In October 2019, the company sold a 6-monthservice contract for $240. The company also sold a 36-month servicecontract for $1,260 in July 2019.
Assuming a calendar year-end, what amount is included in the2019 gross income?
$
c. On December 31, 2019, the company sold anappliance for $1,200. The company received $500 cash and a notefrom the customer for $700 and $260 interest, to be paid at therate of $40 a month for 24 months. Because of the customer's poorcredit record, the fair market value of the note was only $600. Thecost of the appliance was $750.
What amount is included in the gross receipts and what is thegross profit?
The 2019 gross receipts from the transaction are $ and the grossprofit from the transaction is $.

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ANSWER a The amount 1200 is included in the 2019 gross income Explanation The advance payment received in 2018 but the good not delivered in 2018 The Good is delivered in 2019 And the sale was reported in 2019 for financial accounting purposes Thus 1200 will include in 2019 gross income b The amount 330 is included in the See Answer

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In: AccountingDrake Appliance Company, an accrual basis taxpayer, sells homeappliances and service contracts. Determine the effect...Drake Appliance Company, an accrual basis taxpayer, sells homeappliances and service contracts. Determine the effect of each ofthe following transactions on the company's 2019 gross incomeassuming that the company uses any available options to defer itstaxes.a. In December 2018, the company received a$1,200 advance payment from a customer for an appliance that Drakespecial ordered from the manufacturer. The appliance did not arrivefrom the manufacturer until January 2019, and Drake immediatelydelivered it to the customer. The sale was reported in 2019 forfinancial accounting purposes.What amount is included in the 2019 gross income?$b. In October 2019, the company sold a 6-monthservice contract for $240. The company also sold a 36-month servicecontract for $1,260 in July 2019.Assuming a calendar year-end, what amount is included in the2019 gross income?$c. On December 31, 2019, the company sold anappliance for $1,200. The company received $500 cash and a notefrom the customer for $700 and $260 interest, to be paid at therate of $40 a month for 24 months. Because of the customer's poorcredit record, the fair market value of the note was only $600. Thecost of the appliance was $750.What amount is included in the gross receipts and what is thegross profit?The 2019 gross receipts from the transaction are $ and the grossprofit from the transaction is $.