Rex loves to work with his hands and is very good at makingsmall figurines. Three years ago, Rex opened Bronze Age Miniatures(BAM) for business as a sole proprietorship. BAM produces miniaturecharacters ranging from sci-fi characters (his favorite) tohistorical characters like George Washington (the most popular).Business has been going very well for him, and he has provided thefollowing information relating to his business. Rex receivedapproval from the IRS to switch from the cash method of accountingto the accrual method of accounting effective January 1 of thisyear. At the end of last year, BAM reported accounts receivablethat had not been included in income under the accrual method of$20,500 and accounts payable that had not been deducted under theaccrual method of $9,750. In March, BAM sold 9,550 miniaturehistorical figures to History R Us Inc. (HRU), a retailer ofhistorical artifacts and figurines, for $152,800. HRU was soimpressed with the figurines that it purchased in March that itwanted to contract with BAM to continue to produce the figurinesfor it for the next three years. HRU paid BAM $241,020 ($13 perfigurine) on October 30 of this year, to produce 515 figurines permonth for 36 months beginning on November 1 of this year. BAMdelivered 515 figurines on November 30 and again on December 30.Rex elects to use the deferral method to account for thetransaction. Though the sci-fi figurines were not quite as popular,BAM sold 446 figurines at a sci-fi convention in April. Rexaccepted cash only and received $12,488 for these sales. InJanuary, BAM determined that it would not be able to collect on$2,700 of its beginning-of-the-year receivables, so it wrote off$2,700 of specific receivables. BAM sold 143,000 other figurines oncredit for $185,900. BAM estimates that it will be unable tocollect 5 percent of the sales revenue from these sales but it hasnot been able to specifically identify any accounts to write off.Assume that BAM correctly determined that its cost of goods soldthis year is $91,520. The sci-fi convention in April was held inChicago, Illinois. Rex attended the convention because he felt itwas a good opportunity to gain new customers and to get new ideasfor figurines. He paid $1,130 round-trip airfare, $198 for entranceto the convention, $308 for lodging, $125 for cab fare, and $130for meals during the trip. He was busy with business activities theentire trip. On August 1, BAM purchased a 12-month insurance policythat covers its business property for accidents and casualtiesthrough July 31 of next year. The policy cost BAM $8,040. BAMreported depreciation expense of $9,750 for this year. Rex hadpreviously operated his business out of his garage, but in Januaryhe decided to rent a larger space. He entered into a leaseagreement on February 1 and paid $15,000 ($1,250 per month) topossess the space for the next 12 months (February of this yearthrough January of next year). Before he opened his doors forbusiness, Rex spent $31,500 investigating and otherwise gettingready to do business. He expensed $5,000 immediately and isamortizing the remainder using the straight-line method over 180months. In December, BAM agreed to a 12-month, $11,000 contractwith Advertise-With-Us (AWU) to produce a radio ad campaign. BAMpaid $5,100 up front (in December of this year) and AWU agreed thatBAM would owe the remaining $5,900 only if BAM’s sales increased by15 percent over the 9-month period after the contract was signed.In November of this year, BAM paid $3,000 in business propertytaxes (based on asset values) covering the period December 1 ofthis year through November 30 of next year. In November of lastyear, BAM paid $2,000 for business property taxes (based on assetvalues) covering the period December 1 of last year throughNovember 30 of this year. What amount will increase taxable income(positive) or reduce taxable income (negative) for each of theabove scenarios? (Enter the write-off of the receivable under e-1and the sales under e-2. Negative amounts should be indicated by aminus sign. Do not round intermediate calculations. Round yourfinal answers to the nearest dollar amount.)