Randall Company Uses the Calendar Year and the Cash Method

question 11

Essay

Randall Company uses the calendar year and the cash method of accounting. On December 31, 2017, Randall made the following cash payments. To what extent can Randall deduct the payments in 2018?
a. $50,000 for a two-year warehouse lease beginning on March 1, 2019.
b. $95,000 of inventory items held for sale to customers.
c. $1,800 to purchase a new refrigerator for the employees' lounge. The refrigerator was delivered on February 1, 2019.
d. $5,000 compensation to a consultant who spent two weeks in January 2019 analyzing Randall's payroll system.
e. $22,000 property tax to the local government for the first six months of 2019.

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Definitions:

Crowding

A situation characterized by a high density of people or objects in a particular area, often leading to discomfort or restricted movement.

Then

At that time or subsequently.

Buy

To acquire something by paying for it; the act of purchasing.

Assertive

Characterized by confident and forceful behavior, often in expressing one's opinions or defending one's rights without being aggressive.