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Home Office, Inc., an accrual basis taxpayer, leases a copying machine to a new customer...

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Accounting

Home Office, Inc., an accrual basis taxpayer, leases a copying machine to a new customer on
December 27, Year 1. The machine was to rent for $1000 per month for a period of 36 months
beginning January 1, Year 2. The customer was required to prepay 6 months rent at the time
the lease was signed on December 27, Year 1. The customer was also required to pay a $5,000
damage deposit at the time the lease was signed. The damage deposit will be returned to the
taxpayer at the end of the lease if no damage occurs.
Determine the amount of gross income Home Office recognizes in Year 1.
3000
5000
6000
12000
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