In October 2013,Jonathon Remodeling Co

question 108

Multiple Choice

In October 2013,Jonathon Remodeling Co.,an accrual-method taxpayer,remodels and renovates an office building for Dale and bills him $30,000.Dale signs a note for the debt.Dale keeps delaying payment and files bankruptcy in 2014.Creditors are informed that no assets are available for payment.Jonathon Remodeling Co.will report

• A)$0 income in both years.
• B)$30,000 income in 2013 and a bad debt deduction of $30,000 in 2014.
• C)$30,000 income in 2013 and a STCL of $30,000 in 2014 limited to $3,000 after netting.
• D)$30,000 income in 2013 and then must amend last year's return to show $0 income when advised of the bankruptcy.

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Definitions:

Cash Over And Short

Cash Over And Short account tracks discrepancies between actual cash received and the expected amount according to sales documents or records.