Brandon Is the Operator and Owner of a Cleaning Service

question 95

Multiple Choice

Brandon is the operator and owner of a cleaning service who uses the cash method of accounting. He receives the following payments on December 31, 2014, the last business day of his tax year: $3,000 - Checks received from customers for services rendered during November and December 2014. The checks are deposited in his bank account on January 4, 2015. Checks received from customers for services to be rendered during 2015. The checks $4,000 - $2,400 - are received in the morning mail and deposited in his bank account on December 31, 2014. A check received from a customer for a service contract. The services under the contract are to be rendered over 24 months, beginning in January 2015. The customer met Brandon at a New Year's Eve party and gives Brandon the check at 11:30 p.m. The check is deposited in his bank account on January 4, 2015 How much of the $9,400 collected by Brandon on December 31 must be included in his 2014 gross income?

• A) $ 2,400
• B) $ 3,000
• C) $ 5,400
• D) $ 7,000
• E) $ 9,400

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Definitions:

Midnight Deadline

A cutoff point often used in law and finance, indicating that transactions or actions must be completed by 11:59 PM to be considered valid for that day.

First Bank

Historically, could refer to an initial or pioneering banking institution in a region or country, often established to foster economic growth.

Business Days

Days of the week excluding weekends and public holidays during which official business activities are conducted.

Check 21 Act

A federal law that allows banks to handle more checks electronically, which speeds up the check clearing process.