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?

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Definitions:

Atmosphere

The layer of gases surrounding a planet or other celestial body, held in place by gravity.

Earth

The third planet from the Sun, uniquely characterized by its vast oceans, breathable atmosphere, and diverse ecosystems supporting life.

Photochemical Smog

A type of air pollution created when sunlight reacts with nitrogen oxides and at least one volatile organic compound in the atmosphere.

Volatile Organic Compounds

Organic chemicals that have a high vapor pressure at ordinary room temperature, making them significantly evaporative and potentially harmful to the environment and human health.