David Purchased a Deli Shop on February 1^st of Last

question 48

Essay

David purchased a deli shop on February 1^st of last year and began to operate it as a sole proprietorship. David reports his personal taxes using the cash method over a calendar year, and he wants to use the cash method and fiscal year for his sole proprietorship. He has summarized his receipts and expenses through January 31^st of this year as follows:
What income should David report from his sole proprietorship?

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Definitions:

Job Order Cost Accounting

An accounting method that accumulates and assigns costs to specific products or projects based on individual job orders.

Equivalent Units

A concept used in cost accounting to convert partially completed goods into a number of complete units of output.

Work in Process Inventory

Represents goods that are in the production process but are not yet completed.

Conversion Cost

The sum of direct labor and manufacturing overhead costs, representing the expenses necessary to convert raw materials into finished goods.