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:

Flood Basalts

Vast plateau-forming volcanic eruptions that release large volumes of basaltic lava.

Fossil Record

The collection of all known fossils and their placement in rock formations and sedimentary layers, providing historical insights into life's past forms and environments.

Composite Volcano

A type of volcano built up by many layers (strata) of hardened lava, tephra, pumice, and volcanic ash.

Felsic Lava

Lava that is high in silica content, resulting in high viscosity and explosive eruptions; it is characteristic of volcanoes at continental margins.