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:

Reabsorb

The process by which substances are taken back into the body or tissue after having been secreted or excreted.

Urea

A waste product formed in the liver from the breakdown of proteins and excreted in urine.

Creatinine

A waste product produced by muscles from the breakdown of a compound called creatine, commonly measured to assess kidney function.

Excessive Urination

The condition of urinating more frequently than usual, medically known as polyuria.