David Purchased a Deli Shop on February 1ˢᵗ of Last

question 55

Essay

David purchased a deli shop on February 1ˢᵗ 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 31ˢᵗ of this year as follows:
 
$\begin{array} { l r r } & \text { Receipts } & \text { Expenses } \\\text { February thrs. Decernber lastyear } & \$ 112,000 & \$ 84,500 \\\text { Janury this year } & 10,400 & 6,200\end{array}$ What income should David report from his sole proprietorship?

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