In 2012, Bust Company requested and received permission from the IRS to switch its accounting method from the cash method to the accrual method. Taxable income in 2012 (computed under the accrual basis) was
$110,000. At the end of 2012, Bust had accounts receivable of $32,000, accounts payable of $27,000 and merchandise inventory of $10,000. Determine Bust Company's taxable income after all (if any) adjustments. Is any relief available to Bust Company?

Question

Quizplus · Accepted Answer

The Answer of In 2012, Bust Company requested and received permission from the IRS to switch its accounting method from the cash method to the accrual method. Taxable income in 2012 (computed under the accrual basis) was
$110,000. At the end of 2012, Bust had accounts receivable of $32,000, accounts payable of $27,000 and merchandise inventory of $10,000. Determine Bust Company's taxable income after all (if any) adjustments. Is any relief available to Bust Company?

In 2012, Bust Company Requested and Received Permission from the IRS