Orange Cable TV Company, an accrual basis taxpayer, allows its customers to pay by the year in advance ($600 per year) or two years in advance ($960).In September 2019, the company collected the following amounts applicable to future services: $$\begin{array} { l l }
\text { October 2019-September } 2021 \text { services (200 two-year contracts) } & \$ 192,000 \
\text { October 2019-September } 2020 \text { services (200 one-year contracts) } & \underline { 120,000 } \
\text { Total } & \underline { \underline { \$ 312,000 } }
\end{array}$$ As a result of this, Orange Cable should report as gross income for 2020:

Question

Orange Cable TV Company, an accrual basis taxpayer, allows its customers to pay by the year in advance ($600 per year) or two years in advance ($960).In September 2019, the company collected the following amounts applicable to future services: $$\begin{array} { l l } 
\text { October 2019-September } 2021 \text { services (200 two-year contracts) } & \$ 192,000 \
\text { October 2019-September } 2020 \text { services (200 one-year contracts) } & \underline { 120,000 } \
\text { Total } & \underline { \underline { \$ 312,000 } }
\end{array}$$ As a result of this, Orange Cable should report as gross income for 2020:

Quizplus · Accepted Answer

For 2020, Orange Cable should report the income for all one-year contracts fully ($120,000) and half of the two-year contracts ($192,000 / 2 = $96,000), totaling $216,000. However, the correct answer is not listed, indicating a mistake in the question or answer choices.

Orange Cable TV Company, an Accrual Basis Taxpayer, Allows Its