Shadow Services Uses the Accrual Method and Reports on a Calendar

question 124

Essay

Shadow Services uses the accrual method and reports on a calendar year. This year, Shadow agreed to a uniform-cleaning contract with Odie Cleaning. Under the contract, Odie bills Shadow for cleaning services as the services are provided. At year-end, Shadow paid Odie $2,350 for the services rendered during the year. In addition, Shadow paid Odie $700 for cleaning services expected in January of next year. What amount, if any, can Shadow deduct for the cleaning services this year?

---

Definitions:

Retirement

The act of leaving one's job and ceasing to work, typically due to reaching a certain age or for health reasons.

Investments

Assets or instruments acquired with the intention of generating income or appreciating in value over time.

Contract

A contract that is legally enforceable involving two or more parties.

Investments

Allocation of monetary resources with the intention of securing a return or profit.