Ross company is a computer consulting firm the company also

Reference no: EM13591395

What Accounting method (cash or accrual) would you recommend for the following businesses?
a. A gift shop with average annual gross receipts of $900,000

b. an accounting partnership with annual gross receipts of $12 million.

c. A drywall subcontractor who works on residences and has annual gross receipts of $3 million.

d. An incorporated insurance agency with annual gross receipts of $6 million.

Ross company is a computer consulting firm. the company also sells equipment to its clients. the sales of equipment account for approximately %40 of the company's gross receipts. the company has consistently used the cash method to report its income from services and the accrural method to report its income for the sale of inventory. In June of the current year, Ross's accountant discovered that as a small business, the company qualifies to use the cash method for all of its activities. The company is a calendar year taxpayer. As of the begininngin of the current year, the company had $120,000 of inventory on hand and $90,000 aof accounts receivable from the sales of equipment and $30,000 of receivables from the counseling services.

a. Compute the adjustment due to the change in accounting method.

b. Is the adjustment postive or negative? explain.

c. when can the adjustment be taken into account in computing taxable income?

Reference no: EM13591395

Questions Cloud

During its tax year kantz inc receives a loan for 100000 : during its tax year kantz inc. receives a loan for 100000 and sells for 70000 equipment with an adjusted basis of

Should be on 2012 forms and done in pencil it should : should be on 2012 forms and done in pencil. it should include a schedule that shows the fiduciary income calculation

Discuss the propriety of a increasing the stated value of : discuss the propriety of a increasing the stated value of goodwill prior to the negotiations and b eliminating

The jackson company has invested in a machine that cost : the jackson company has invested in a machine that cost 90000 that has a useful life of nine years and that has no

Ross company is a computer consulting firm the company also : what accounting method cash or accrual would you recommend for the following businesses?a. a gift shop with average

During the year belyk paving co had sales of 2394000 cost : during the year belyk paving co. had sales of 2394000. cost of goods sold administrative and selling expenses and

Zorn conducted his professional practice through zorn inc : zorn conducted his professional practice through zorn inc. the corporation uses a fiscal year ending september 30 even

The equipments salvage value is zero suzuki usesstraight : suzaki manufacturing company is considering three new projectseach requiring an equipment investment of 22000.

The svelte jeans company produces two different types of : the svelte jeans company produces two different types of jeans. one is called the simple life and the other is called

User Account

All Pages